Fed policy is starting to become a hot topic amongst investors because of the spike in inflation. There would be even more calls for an end to QE and a rate hike if the April jobs report had met expectations. Even still, reports like the Philly Fed manufacturing prices reading show there is some pressure on the Fed to move hawkishly. The good news for the Fed is the 10 year yield is only at 1.61%. There is nothing destabilizing about the 10 year yield being at the same level it was at in 2012. The Fed’s biggest worry besides its main goals of keeping employment high and inflation moderate is probably the decline in the dollar. The dollar index is at $89.85 which is very close to a 6.5 year low. Higher rates and tapering QE would strengthen the dollar. Ending bond buying would lower demand for treasuries directly. However, hawkish policy would suppress long term rates because it would mitigate inflation and economic growth.