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On the other, to drive bond yields down the ECB will have to drive bond prices up.
Promising lower rates for longer is one way to do this, because it will drive bond yields lower.Some officials have argued that the Fed could better steer private-sector expectations with a framework that more explicitly committed it to lower unemployment or higher output.
She argued earlier this week that such a proposal could be counter-productive, as it would drive bond prices up: This will not only render the operation extremely expensive and inefficient, but it could incentivize banks to hold onto their peripheral sovereign debt; if bond prices are rising, then the value that banks can borrow against that collateral will improve.
Even so, such posturing when reported by the press tends to drive bond prices downward.
Friday's revision in fourth quarter GDP could drive bond yields even higher.
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The increases in retail sales and consumer sentiment drove bond prices lower.
The stagnating economy also helps, as it reduces inflation, which drives bond prices higher and yields down.
The perception of "lower for longer" global monetary policy drove bond yields to record low levels, compressed corporate bond spreads, and pumped up stock markets and emerging market bonds.
If central banks are correct in arguing that QE has driven bond yields down, then logically a reversal of QE might drive yields up, in effect tightening monetary policy.
And I've always had a soft spot for Garbage doing the operatic theme-song The World Is Not Enough (1999), with that note of glowering dissatisfaction — the kind of thing that drives Bond villains to push for global domination.
Some event caused the bond market to overshoot in one direction, some excuse that drives bond yields too low.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com