“So, it appears to me that investors in Treasury Notes and Bonds believe that the US government is not going to go bankrupt and that there will not be major inflation in the foreseeable future.”
Tom,The federal reserve is buying our debt, as nobody else will. There is no free market or supply and demand. Our government prints trillions, then to cover that printing gives itself an IOU for as many trillions as it printed.
This would be like charging your Visa bill to Visa forever, without any limit, and without any concern of having to pay back. It isn't free market, it really isn't even market. It is the government inflating our currency.
The result of inflation takes a few years to appear. In a recession, when the speed of monetary movement is slow, the extra cash isn't as noticeable. If we ever have a recovery under the current administration (which may not be possible due to structural issues within the administration itself) we will experience tremendous inflation.
This is why China and others are cashing out of U.S. Treasury notes as quickly as they can. Once they mature, China doesn't buy any new U.S. notes to replace the old.
What you are so pleased about, is really an economic catastrophe on the first order. It isn't something to be happy about, and it certainly isn't good news. It is a disaster about to befall Americans.
"I don’t believe that many investors would be acting that irrationally"
Many wouldn't. And they aren't. That's why the government is having to buy them.
The correct answer is buying at a 4% yield will yield 4% at a risk profile
"Total Recall, are you saying that if I was to buy a 30 year Treasury with a 4% yield that I would really be earning a 10% yield (4 + 6)?
"So, yields could be controlled by the Fed (the government) if the Fed targeted Treasury yields, but the Fed does not target Treasury yields it targets the Federal Funds rate."
The article clearly stated the Fed is setting the yield. They have a target yield and will buy up whatever treauries they need to artificially push the yield to that point. The Fed has already stated that is their policy and their intention and that they intend to continue with that policy. Supply and demand have nothing to do with bond yields, which has been pointed out to you more than once.