Economic Rebounds and Fed “Taper Tantrum”

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Economic Rebounds and Fed “Taper Tantrum”

By Blu Putnam, Chief Economist
Erik Norland, Senior Economist
CME Group

Four Traits of Economic Rebounds

  • ​​​In an economic rebound, phase transitions might be abrupt.
  • Uneven sectoral recovery could set back employment goals.
  • A return to pre-pandemic norms might include higher rates.
  • Some supply-chain bottlenecks might be easing.
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A Second Fed “Taper Tantrum?”

  • Treasury yields for 10Y, 30Y are well below levels during 2010 expansion.
  • Inflation expectations have surged, but real inflation holding at 2013 levels.
  • Fed’s “taper tantrum’ nearly doubled 10Y yields to over 3% from 1.6%.
  • Will Fed scale back asset purchases amid expectations for solid growth?
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