Long-term rates reflect nominal GDP, not deficits
The hosts argued that long-term interest rates are driven by growth and inflation expectations, not by government debt, deficits, or technical factors like Treasury auctions.
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The Callback
Fed's pause and reduced guidance steepen yield curve
33 weeks between these two statements.
The core thesis presented was that to meaningfully lower mortgage rates, the administration must first find ways to lower longer-term Treasury yields, as the transmission from Fed policy to the long end is imperfect.
The hosts argued that long-term interest rates are driven by growth and inflation expectations, not by government debt, deficits, or technical factors like Treasury auctions.