Good morning. Two-year Treasury yields (known by law in the financial press as “rate-sensitive two-year yields”) are almost back to where they were before Wednesday’s benign inflation data. One good consumer price index report is not enough to cure the inflation scaries, it seems. Email me if you think the market is too timid: robert.armstrong@ft.com.

Friday interview: Steven Kelly

Steven Kelly is the associate director of research at the Yale Program on Financial Stability, where he works on the prevention and fighting of financial crises. He has for some time been Unhedged’s go-to source whenever the financial system starts to show signs of stress. We sat down with him to discuss capital requirements, liquidity, stablecoins, money market funds and much else. 

Unhedged: Let me start by asking you to respond to JPMorgan’s Jamie Dimon. He has made three complaints about the Basel III banking standards. One: there is enough capital in the US banking system already. It has been tripled to $900bn since the financial crisis. Two: if you do make banks add more capital, they will lend less. Certain forms of credit will leave the banking system. We’ve already lost leveraged lending; your grandmother’s mortgage is next. Finally, when this activity leaves banks, it will go to dark and unregulated corners of the financial system where you don’t want it.