Hacker News Reader

The front of the yield curve is driven much more by Fed policy than the tail end of the curve. QE was utilized to try and influence longer tenors. Ultimately the term structure is driven by supply and demand, so the composition and size of the Fed's balance sheet has a direct impact on the shape of the curve.

View on HN

well, i'd say all interest rates are endogenous: determined by fed policy or future expectations of fed policy based on macro variables. The fed can manufacture as much 'funding' of demand as it wants to as it has an unlimited buying power.

> all interest rates are endogenous: determined by fed policy or future expectations of fed policy based on macro variables

The Fed frames its policy response in terms of the somewhat nebulous natural rate, which implies that there is some exogenous component to rate policy. Additionally, rates have consistently trended downwards for 500 years, well before the invention of central banks [0], supporting the notion that rates are driven by exogenous factors.

[0] https://econreview.berkeley.edu/the-long-decline-of-global-i...

Reply on news.ycombinator.com