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Robin Brooks points to an example of Goodhart's law unfolding in the euro zone, where the European Central Bank (ECB) has implemented elaborate mechanisms to cap spreads. While these measures have successfully tightened spreads, Brooks observes that yields continue to rise across the region.
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Brooks previously highlighted challenges facing Warsh as the Federal Reserve considered a hawkish stance during a global bond sell-off, stressing the need to anchor long-term yields in July. He also noted bitcoin’s rally compared to other safe haven assets after dovish Fed signals last month in another report. These observations provide context to his recent comments on euro zone yields.