Direxion Daily S&P 500 Bear 3X Shares (SPXS)

[wadirum1]

The 10-year Treasury is scarcely being affected by rising inflation. How much of this nonresponse is because the Fed is pumping money into the market for these bonds?

https://fred.stlouisfed.org/series/WALCL

When inflation expectations go up, then the nominal interest rate must also go up unless something happens to reduce the real rate. Did inflation expectations go up? Well, todays numbers are anomalous, but even the most optimistic forecasts are saying 2.5 percent. Meanwhile, the nominal 10-year rate is 1.6 percent, putting the real rate below zero. So, if the real rate is negative and possibly declining, then is that due to aggressive Fed policies or due to speculative excesses on the part of private investors -- or some unholy combination of private investors creating a bonfire and the Fed adding the gasoline?

It is all incredibly good news, right up until it isn't. If the Fed stops pouring gasoline or if private investors get spooked and demand higher returns, then all of a sudden this party gets shut down and people start jumping out windows.