Editor's note: Given events since this post was written, validating its view that rates will rise more slowly than anticipated in August, we are putting it outside the paywall.
Summary: the same people who have been screaming inflation for the past few years are now saying that interest rates are finally about to explode. This is alarmist nonsense that disregards the influence policy rates have over the term structure of rates. It also disregards real economy feedback loops. I explain here.
I have often said that the Fed exerts a dominant influence across the yield curve, not just on the short end. And by this I meant that long-term interest rates on government liabilities are really a series of future short-term rates. It tells you that the interest rates of tomorrow...
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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.