Based on traditional and long-abandoned fixed policy models, Cleveland Fed researchers reckon policy is already more aggressive than any of those rules suggest. The political and policy appetite for zero interest rates or quantitative easing - which seemed to chase estimates of R-star ever lower over the past decade - is gone. At the same time, real yields above 4% have proven unsustainable historically. Bhatia feels real yields somewhere in the middle is where markets will settle. Given the economy-wide accumulation of debt over recent years, real 10-year yields in a 1.5%-2.0% range probably works.

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