Brian Chappatta, Columnist

Fed’s Yield-Curve Control Isn’t for Taming Long Bonds

As Treasury yields surge, a reminder of what the central bank has left in its toolkit.

February 17, 2021 at 11:00 AM UTC

Brian Chappatta is managing editor of Bloomberg News' leveraged finance and distressed debt teams. He was previously managing editor and team leader of its wealth group. Before that he was a Bloomberg Opinion markets and finance columnist and a bonds reporter for Bloomberg News.

Richard Clarida and Lael Brainard aren’t worrying about long-end rates.
Photographer: Sarah Silbiger (Clarida); Zach Gibson (Brainard)/Bloomberg

Provide news feedback or report an error

Site feedback:

Take our Survey

This article is for subscribers only.

Benchmark 10- and 30-year U.S. Treasury yields soared to 12-month highs on Tuesday in a selloff steep enough to make seemingly invincible stock indexes shudder. Like clockwork, market chatter started up: What will the Federal Reserve do to stop this move? Will it institute yield-curve control?

Take a deep breath. Now, to bring up yield-curve control misunderstands how Fed officials, notably Vice Chair Richard Clarida and Governor Lael Brainard, have said they envision carrying out the policy, which remains deep within the central bank’s toolkit. Simply put, yield-curve control has never been about squashing longer-term yields, like those on 10-year notes or 30-year bonds. Instead, it’s a way to make sure bond traders don’t try to strong-arm the Fed into raising short-term interest rates before it’s ready to do so.