Some kind of yield curve control?
I think the Fed has to step in today. The liquidity measures didn't succeed and the market desperately needs a lifeline. The Fed has some ammunition and now is the time to spend it.
The rising yields at the long end today could suggest some kind of liquidation or blowup or some kind of collateral move in the Fed's unprecedented term-loan operation today. It could also be a sign of imminent Fed action.
If the Fed announces a new QE operation to go with a cut in rates to the lower bound, don't expect the usual bond buying across the curve. Instead they will focus on keeping a slope in the yield curve, just like the Bank of Japan.
Here is a look at 2s30s and you can see the accelerating rise today. It's up to nearly 100 bps from a low of 40 bps in the meltdown at the start of the week.
