Fed and Treasury have added enormous amounts of stimulus even as output potential has dropped due to lockdowns.
Demand up, supply down, is inflationary. Except if it isn't, because all the stimulus ends up in asset prices rather than demand.
Enter the Great Reopening. We get to see what *real* demand and supply are. That's why bonds are crashing and dragging stocks down.
The *likely* Fed response is yield curve control. The Fed has the hammer and can lower long rates if it wants. But the consequence is *MOAR* qe (and potentially at an accelerating rate) into an environment that the market sniffs out as potentially inflationary.
Right now, gold is dropping in lockstep with bonds dropping. Because that's what historical correlations say should happen.
But we're all waiting to see if the Fed has an exit strategy from the pandemic, or if they are forced into ever larger monetizations.
Understand the players on the field, and watch both the real data and the policy response.