Rates Survey Says...

Answers (A to Qs) in order they were asked.

1A: Rates rise limited by Fed
2A: Rates rise=debt issues
3A: Low rates=buy stocks
4A: Rates rise is a good sign
5A: Overall commodities
6A: Its all about narratives!
7A: All of the above

My assessments... 1/7 https://twitter.com/bondstrategist/status/1361654612307116032

Survey review: First, thank you for those that participated, got a decent response so I believe the results are credible. With l/t rates on their back-foot and under a ton of pressure lately, the (A) to Q1 is troubling. The majority think the Fed will limit the rise in rates. 2/7

Fed has a communication issue forming and the potential taper tantrum 2.0 risk as well. The idea that rates will stay low forever is the narrative and the Fed has various tools. Meanwhile the Fed also is hoping for sustained higher inflation. It might be leading to confusion. 3/7

Higher rates, from the lows can be championed and narrative can be flipped into higher rates are a good sign. Perhaps the Fed is sitting on the sidelines waiting for the "right level" to slap on YCC as many must expect in order to answer Q1 that way. Or fintwit world is... 4/7

...playing w/fire as Fed might look the other way if the economy is opening up & rates keep rising w/o tightening financial conditions, FCI (ie stocks don't crash). This is where the plot thickens. This move is probably just the first test, but markets might test the Fed's... 5/7

...promise to keep rates low while championing higher inflation. This might be the test, IDK, but feels alot has been done and at some point it flares out. The real test should still end with a feedback loop into FCI. So for all those that want YCC to cap their bond losses... 6/7

and make them feel comfy putting on yield carry trades, in order for the Fed to YCC, its almost a g-tee we need to see FCI take a hit where higher rates=lower stocks force the Fed to use one of their last remaining bullets. Oh, in the crosshairs to all this, will be credit. 7/7