Feldstein: Bond Vigilantes Are Finally Showing Themselves

The video discusses the emergence of bond vigilantes and their impact on interest rates, highlighting the unsustainably low long-term rates due to monetary policy. It anticipates a normalization of these rates and examines the Fed's influence on the bond curve. The discussion shifts to the potential market impact of price declines, noting that some investors may not be affected due to their investment strategies.

What is the primary reason for the unsustainably low long-term interest rates mentioned in the video?

• Increased consumer spending

• Global economic slowdown

• High inflation rates

• Monetary policy

What part of the bond curve is referred to as the 'belly'?

• 20 to 30 years

• 7 to 10 years

• 3 to 5 years

• 1 to 3 years

How has the Federal Reserve influenced long-term interest rates?

• By buying billions of dollars of long-term bonds

• By reducing inflation

• By increasing short-term rates

• By selling short-term bonds

What shift in analysis is discussed in the context of bond market changes?

• From market analysis to risk analysis

• From risk analysis to yield analysis

• From yield analysis to price analysis

• From price analysis to yield analysis

How might some investors react to price declines in the bond market?

• By increasing their bond purchases

• By marking their portfolios to market

• By selling all their bonds

• By welcoming positive yields