Powell Painted Into a Corner… Again

by Craig Hemke
Sprott Money

Back in 2019, we often wrote of how Fed Chairman Powell was being painted into a policy corner by the bond market. We knew this would force fed fund rate cuts, and it did. And now here we are again in 2020.

If anything, this isn’t complicated. As last year began, the vast majority of analysts and seven-figure Wall Street economists were projecting rate hikes and a 4+% U.S. ten-year treasury yield. We knew this was nonsense, as neither the public nor private sector could handle or manage this level of interest rate debt service cost. Soon the bond market began to understand this, too, and as 2019 unfolded, we began to document Powell’s conundrum and make some pretty easy predictions:

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