Eurodollar University Episode 168, Part 2: Given All That’s Going On, Good Time To Red-Pill Bond Market Skeptics
168.2 Federal Reserve HAS NOT rigged the bond market
———Ep 168.2 Summary———
The Federal Reserve, and other central banks, buy tremendous amounts of government securities and this should impact bond prices. Should, but doesn’t. That’s because there’s an even more powerful force than the Fed, the bond market itself. We review the 2007-19 evidence.
———Ep 168.2 Topics———
00:00 INTRO: Has the Federal Reserve rigged the bond market? Can we rely on its signals?
01:06 Mainstream analysts say bond yields are low because the central banks buy bonds.
01:59 Eurodollar futures and the US dollar – two huge markets – corroborate the bond market.
05:52 Central banks buy lots of bonds, true. Bonds are not materially impacted, also true.
07:17 Central banks may account for a ~50 basis point reduction to bond yields (maybe).
09:46 How did US Treasury yields react to the Federal Reserve’s actions during 2007-09?
11:04 How did US Treasury yields react to the Federal Reserve’s actions during 2009-10?
12:59 How did US Treasury yields react to the Federal Reserve’s actions during 2011-12?
15:52 How did US Treasury yields react to the Federal Reserve’s actions during 2012-16?
18:34 How did US Treasury yields react to the Federal Reserve’s actions during 2017-19?
20:51 How did the European Central Bank’s experience differ from the Federal Reserve?
———Ep 168.2 References———
No, The Fed Does *Not* Rig The Bond Market And It Only Takes Five Seconds To Debunk This Myth: https://bit.ly/3CLJMRu
How the Fed Rigs the Bond Market: https://on.wsj.com/3p0eC3V
Alhambra Investments Blog: https://bit.ly/2VIC2wWlin
RealClear Markets Essays: https://bit.ly/38tL5a7
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Jeff Snider, Head of Global Investment Research for Alhambra Investments. Illustrations by David Parkins, myth maker. Audio and video editor, The Terence. Logo design by pixelist Lisa Jiang. Master of ceremonies, Emil Kalinowski. Podcast intro/outro is “Turquoise Waves” by Sarah, the Illstrumentalist found at Epidemic Sound.
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