The Fed is losing control of interest rates as the “belly” of the Treasury yield curve blew out this week, bringing the yield on the 10-year note briefly above 3%:

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The Federal Reserve balance sheet now stands at $3.611 trillion, some $800 billion more than it was the last time long rates were at current levels:

Has the Fed finally begun to lose control of interest rates?

The Fed is in a catch-22 situation: If they begin to taper and talk more hawkish the stock market will surely crash, 1987 style – meanwhile, if the Fed continues on QE-infinity they will dig themselves a deeper hole and interest rates will likely continue to rise anyway as market participants price in the specter of inflation becoming unglued.