Oh, I don't know... could it be that Ben's damn the torpedoes, full speed ahead steroidal power drive has something to do with the chart of the chart of the 10 year note (chart 1)? Or how about that 30 year yield we often review (chart 2)? NO MORE WIGGLE ROOM... which means Ben has no more wiggle room. Which means just maybe he does not have a choice but to keep buying treasuries (QE2 and beyond...) to try to keep that damned yield from exploding.
Can you imagine this, an entity buying treasury bonds because no one else will (the frightened herds are probably buying the stock market right about now, leaving their sucker's play, T bonds, behind). China? Somehow I don't think they are going to fight their own inflation problem by buying our bonds.
So, we have a recovery of sorts. Bernanke talks about jobs and sub par growth as the important reasons for continued QE. But the reality is that the 'line in the sand' we have been watching for what must be years now here on the blog, is under real threat of breaking. Our hero buys the bond for all the reasons he routinely spouts on about. But he seems to leave out another convenient possibility; the Fed will lose one of its most important tools for macro economic manipulation if the horse breaks down the barn door and inflation hysteria breaks out.
So I guess the plan is to continue inflating while trying to bend the bond to his will in an effort to delay such a signal. You do realize how screwed up this is, right?
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