There is real risk here, and the Fed will get whacked when
normal yield relationships, and real yields re-emerge.
Not exact matches
At present, the
relationship between earnings and bond
yields seems tighter because of the large substitution of debt for equity going on, but that's not a
normal thing in the long run.
The Fed would have to do a lot in order to bring mortgage rates lower versus swaps because we are close to the
normal relationship of swaps versus mortgage
yields.