Julia Coronado, founder and president of MacroPolicy Perspectives, has some insight. “I think the fiscal package that needs to be financed is certainly one of the reasons that yields have moved higher,” she said. “That’s both because the market needs to absorb all of that debt issuance, but also it’s a reflection that that stimulus is going to lead to stronger growth, maybe a little bit higher inflation, and that means that yields should be higher, anyways.” In other words, there’s more supply and better prospects for the economy that are leading yields higher. But Coronado said this isn’t a problem right now. “Yields are still very low. We’re back at the interest rates we saw pre-pandemic, which were very low.” She said “it’s nothing that has gone so far that we worry about it derailing the economy.”
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