Scholar argues Treasury supply does not drive high yields
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What happened
Carolin Pflueger, a resident scholar at the Chicago Fed, argues that the supply of Treasury bonds does not drive high yields. She suggests that because taxpayers and bondholders are largely the same people, the movement of money is simply between pockets. Pflueger states that most of the 30-year bond's 5.63% yield reflects real risk compensation rather than inflation fears.
From aol.com
Why it matters
Pflueger's view challenges the theory that rising yields are primarily due to increased bond issuance. She notes that bonds are currently moving alongside stocks, suggesting they are not functioning as traditional portfolio hedges.
From aol.com
Who's involved
- FEDThe host institution where the scholar is based.