A ‘Buy Everything’ Rally Beckons in World of Yield Curve Control
- Fed and BOE may follow Japan, Australia in targeting yields
- Move could boost bonds, credit, equities and carry trades
Federal Reserve Chair Jerome Powell said the usefulness of the policy “remains an open question” on June 10.
Photographer: Andrew Harrer/BloombergThis article is for subscribers only.
As central banks pump trillions into the world economy, investors are setting their sights on what could be the next big thing in global monetary policy: yield curve control.
The strategy, which involves using bond purchases to pin down yields on certain maturities to a specific target, was once deemed an extreme and unusual measure, only deployed by the Bank of Japan four years ago after it became clear that a two-decade deflationary spiral wasn’t going away.