JPOW and Yellen have been quite clear that they intend to create epic levels of inflation and shred bondholders. History is replete with paper currencies getting debauched. As a result, I expect that our clueless band of inflationeers will succeed beyond their wildest dreams—especially as there is no one in congress interested in acting as a brake on the spending side. Those who aren't mortified, either aren't paying attention or aren't particularly good at their understanding of history.

Where will interest rates go? They're going much, much higher—though I suspect a counter-trend pullback first. The Fed will try Yield Curve Control (YCC), they'll try to prop bonds up, but at some point, increased issuances and inflation will swamp their bid. It isn't a question of if, rather it is a question of when they lose control of the bond market. However, this is going to play out over many years—it isn't a today sort of trade. Oddly, Wall Street has a funny way of extrapolating recent moves and expecting them to continue or even accelerate. Much like going broke, rates will ramp gradually and then suddenly. I'm willing to bet that we're still in the gradual phase here.