The Fed And The Market - Managing The Yield Curve

It puts an entirely different slant on how we view the Yield Curve. It's no longer this passive time difference between short and long maturities. Now, it's as if there is one active player (the Bank—the Fed) who puts up their latest interest rates. While on the sidelines, the rest of the world (literally) stands in judgment of the Fed's move.

If the Fed raises rates too high, as they did from 2022 until 2024, the long end of the Yield Curve, the Seer, stays put, refusing to budge, showing to the world that the Fed has overreacted.