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.

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?