Whilst the sharp backup in 10-year T-note yields (from 3.06% to 3.25% earlier this week, the highest since May 2011, chart 1) has come as a surprise to financial market participants, given the nature of the increase it should be seen as a positive development that should be welcomed. This is not a view shared by the President who, in the great tradition of some past presidents, has pointed the finger at his (newly appointed) Fed chairman saying, "I think the Fed is making a mistake. They are so tight. I think the Fed has gone crazy." In this week's Economics Weekly we look at what is behind the rise in yields and what it might mean for equities.
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Richard de Chazal, CFA is a London-based macroeconomist covering the U.S. economy and financial markets.