@TinFoilHatforgive if you know this... but the US has already...

@TinFoilHat

forgive if you know this... but the US has already been doing implied YCC for years - it just isnt called that. Which is why they havent had to announce it

QE is effectively YCC - just without an overt statement that there is a precise target for the bond prices.

ie QE is a govt creating debt which it then buys back from market participants to lower the rate curve and so stimulate growth. US FOMC currently has a monthly $120Bn bond repurchasing program in place though its actual useage each month can vary

QE is basically - 'we're buying the curve but we dont have to buy any particular bit and we arent committed to how much we spend. But just know we are there - we have your back Mr Bond Bull, Mr Equity Market, Mr Junk Bond Market')

YCC is more precise - it implies US FOMC/Treasury will target specific rates ranges for the US 10yr bond and other key points on the curve

Once US does that officially - they are saying theyll throw the kitchen sink (spend huge sums) simply to hold the rates around those target rates

It would be seen as official confirmation of what we implicitly already know - US cant tolerate high long term bond rates because of the cost drain of higher bond yield payments

It would also create a target for bond market vigilantes. basically like what Soros did when he attacked the UK currency market

the US may well already be doing actual yield rate targetting - YCC - I think it almost certain they are

They just dont want to announce it until put in a position where they have to - because they know that then sets up a raft of market reactions that they dont wnat to encourage

ie gold/silver would surge, bond market holders with an agenda may dump into key bond's to spin the US' wheels and suck up big wads of US budget.


basically it was the bread crumbs pointing to YCC in this morning's FOMC that are the reason gold/silver elevated higher

in order to undertake YCC - the US first needs to refresh a change to the asset/cash holding ratio (SLR)for US bond market primary dealers - ie the big investment banks

the SLR is the ratio of capital vs assets the banks have to hold. They were given an exemption from having to count US bonds against that ratio - but it expires end of this month

So the fact they increased the RRP counterparty limit plus mentioned theyll speak about the SLR shortly are both being taken as pointers that the FOMC wont be downsizing its balance sheet any time soon

the implication is the Fed will keep buying the bond curve to suppress yields

and this also sets the stage for YCC - though as I said - they are likely doing it already so Im not sure if there will ever be an announcement of it unless the bond market gets so overheated they think they need to jawbone it back under control