The Fed Has Trained Bond Traders Not to Push Yields Up Too Far
- Mere prospect of central-bank action is pinning yields down
- Buyers emerged this week to limit selloff amid stimulus talks
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The message from the bond market after the latest brief leap in yields is clear: The Federal Reserve is standing by to prevent an alarming increase in rates, no matter how much debt the Treasury sells amid the pandemic.
Investors have been acting for months as if the Fed has already unleashed one of the remaining tools at its disposal -- yield-curve control, a policy of capping rates to keep them from rising too quickly and squelching an economic rebound. And this week has been no exception.