The high wire act has commenced

Credit Bubble Bulletin/Doug Noland/1-28-2022

“There’s a narrative that seemed to gather some momentum as a wild market week came to an end (10-yr yields ended the week 11bps below Wednesday’s highs): ‘Peak hawkishness and policy mistake fear.’ I can make sense of part of this. With BofA calling for seven rate hikes this year, it won’t be easy to turn much more hawkish on rates. Yet I don’t believe policy mistake fears will revolve around the course of interest-rates. It’s when the Fed fails to quickly come to the markets’ defense, as de-risking/deleveraging dynamics gather momentum, that will provoke shrieks of ‘policy mistake!’”

USAGOLD note: Some bottom-line realism from Doug Noland …… The true test of the Fed’s resolve will come if and when the stock and bond markets begin to show signs of advanced stress.