Friday, November 1, 2019

October 2019 Yield Curve Update

The yield curve still seems to be following the bearish timeline.  My axioms here are:

1) The true measure of inversion isn't a slope of zero.  At the zero lower bound, it is a slope of a little more than 1% (10 year minus Fed Funds), which declines as the base yield rises.  (At about 5%, meaningful inversion happens at a slop of zero, and higher than that, the slope will tend to become more negative the higher yields are.)

2) The neutral rate is a moving target.  If the Fed drops its target rate too slowly, long term rates will tend to stabilize but not rise, and this usually ends in some sort of contraction.  If the Fed gets ahead of the dropping short term rate, then long term yields will pop up like they did a couple times in the 1990s, and contraction will be avoided.  So, if the scatterplot keeps moving to the left as it did this month, that's bearish.  If it moves up, that's bullish.

The second graph is the Eurodollar yield curve, which continues to move up and down a bit but with a negative short term slope and a pretty flat long term slope.  I expect the short end of this curve to eventually drop below where it was in late August.  It will be good news if it doesn't.

5 comments:

  1. One bedroom apartments in Los Angeles rent for $2491 a month on average (a 9.63% increase from last year) and two bedroom apartment rents average $3279 (a 7.72% increase from last year).”

    https://www.rentjungle.com/average-rent-in-los-angeles-rent-trends/

    ---30---

    Egads. US policymakers are talking about such-and-such quadrant in Syria, or Ukrainian phone calls.

    First, Detroitify the Industrial Heartland, then Hong Kongify the coasts. Yes, hyperbole...but not off the mark.

    ReplyDelete
  2. You will surely love the idea of wearing a Look with a lot of style, during the night of Halloween, so we took on the task to know what were the trends in Halloween costumes for that day matching couple bracelets, and today we bring them for you, so you can not stop reading this post and get to know them.

    ReplyDelete
  3. customers or clients to spread the news and backer the center message. An all the more regularly utilized expression for this, is to allude to it as viral showcasing. blog comments service in 1$

    ReplyDelete
  4. Homework helps to develop responsibility and discipline as well as improve organization and time management skills. That's why it should be taken seriously, and especially if you want to make sure it gets done right!

    ReplyDelete