BREAKDOWN: Why Are Traditional Investors So Hungry for Yield Curve Control?
CoinDesk Podcast Network
CoinDesk
4.8 • 689 Ratings
🗓️ 23 August 2020
⏱️ 18 minutes
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Summary
When FOMC minutes suggested the Federal Reserve might not employ yield curve control, the markets reacted angrily.
This episode is sponsored by Crypto.com, Bitstamp and Nexo.io.
On today’s edition of The Breakdown’s Long Reads Sunday, our selections have to do with one of the hottest topics in central banking: yield curve control.
“What Is Yield Curve Control?”
The first piece is from the St. Louis Federal Reserve and is a primer on YCC, including past U.S. implementations as well as versions from Japan and Australia.
“Market Jitters Show How Much Fed Medicine Matters”
Our second piece is an op-ed about how dramatically markets reacted to this small detail from the Federal Open Market Committee minutes, and what it suggests for their desires involving YCC.
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Transcript
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| 0:00.0 | Welcome back to The Breakdown with me, NLW. |
| 0:09.1 | It's a daily podcast on macro, Bitcoin, and the big-picture power shifts remaking our world. |
| 0:15.3 | The breakdown is sponsored by crypto.com, BitStamp, and nexo.io, and produced and distributed by CoinDesk. |
| 0:24.1 | What's going on, guys? It is Sunday, August 23rd, and that means it is long reads Sunday. |
| 0:32.0 | This is the episode each week where instead of doing my own analysis or featuring an interview, |
| 0:36.6 | I read an article or two, |
| 0:39.1 | as is the case this week, that teach about or inform on some important topic. This week I'm doing |
| 0:45.7 | a two-parter on yield curve control. It's a concept that was in the news in the context of the |
| 0:51.8 | FOMC meeting from last month whose minutes were just released this |
| 0:55.5 | week. And it's a concept that I think you're going to be hearing a lot more about. So the two |
| 1:01.3 | pieces I'm going to read today. The first is from the Federal Reserve Bank of St. Louis. It's called |
| 1:06.4 | What is Yield Curve Control? It was just written about a week ago. This is a primer. So if you've |
| 1:11.9 | already familiarized yourself with this, if you have been thinking about and know about yield |
| 1:15.9 | curve control, that's not the one for you. However, the second article is called Market Jitters |
| 1:20.7 | Show How Much Fed Medicine Matters by John Authors from Bloomberg Opinion. That one is a little |
| 1:26.4 | bit farther down. So skip ahead |
| 1:28.3 | if you already know about yield curve control, but want to hear that point of view. That said, |
| 1:33.8 | let's do What is Yield Curve Control from Tuesday, August 11th, 2020 by Kevin L. Kleason, |
| 1:41.1 | Research Officer and Business Economist and Catherine Boken, research associate |
| 1:45.4 | at the Federal Reserve Bank of St. Louis. Traditionally, the Federal Open Market Committee |
| 1:50.9 | targets the federal funds rate as a primary tool to conduct monetary policy. |
| 1:56.1 | The Fed funds rate is a rate with a very short maturity. |
... |
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