Not a Shift, a Twist

What happened to the yield curve on 29 July was not the market repricing the Fed. It was the market repricing something the Fed does not control

and the fiscal constraint I have been writing about as a projection has quietly become a price.

In the last post I said the thirty-year yield deserved separate treatment and left it at that. This is that treatment. It needs one piece of apparatus first, and the apparatus comes from the risk-management literature rather than from monetary economics — whic…