How Yields May Defy Wall Street Logic Once Unwind Begins

The video discusses the effects of quantitative easing (QE) on bond yields, highlighting that contrary to expectations, yields have risen during QE periods. As the Federal Reserve begins to unwind QE, there is uncertainty about whether yields will rise or fall. The discussion includes the potential for yields to remain stable or decrease despite the Fed's pullback, due to the economy's slow return to pre-crisis growth levels. The video also addresses the Fed's tightening measures amidst low inflation and moderate GDP growth, questioning the basis for higher yield forecasts.

What is the primary purpose of quantitative easing (QE)?

• To stimulate the economy by purchasing government securities

• To increase interest rates

• To decrease the money supply

• To reduce government debt

During periods of quantitative easing, what unexpected trend has been observed with yields?

• Yields consistently fall

• Yields remain unchanged

• Yields have been observed to rise

• Yields become highly volatile

What does historical data suggest about the behavior of 10-year Treasury yields after QE periods?

• Yields always increase

• Yields tend to fall

• Yields remain stable

• Yields become unpredictable

What is the current inflation target set by the Federal Reserve?

• 2%

• 3%

• 4%

• 1%

Given the current economic conditions, what is the challenge in forecasting higher yields?

• Subdued economic growth and low inflation

• Strong GDP growth

• High inflation rates

• Excessive government spending