St. Louis Fed President James Bullard said it’s an “encouraging sign that the Treasury 10-2 spread is returning to more normal levels for an expansion.” Markets are ” hoping to see the end of the pandemic in 2021,” he added. “. They’re hoping to see good growth going forward, and because of that you’re seeing the yields normalize.”
But he also emphasized, “we want to get through the pandemic and sort of see where the dust settles, then we will be able to think about where to go with balance-sheet policy.” Fed would like to “replicate” the 2013 tapering process “when the time comes”. However, “we are not close to that yet.”
