Monday, April 6, 2020

March 2020 Yield Curve Update

Well, so much has happened, I hardly need to update the yield curve.  Coronavirus has given us one big push into the recessionary outcome that we have been tentatively dancing around for some time.

The first graph here is the comparison of the 10 year yield and Fed Funds Rate.  The imminent recession has pushed the neutral rates of both down considerably.  But, the Fed has been very responsive.

There are so many moving parts moving in such extreme directions, I really don't have anything to say at this point.  Normally, I would suggest that we should be hoping for 10 year yields eventually to run up above 1.5% or 2% as a first step to recovery, but it is all so complicated now, and the Fed makes it even more complicated than it needs to be, so for now I'm just going to watch.


 Here is the yield curve at several points since the early days of the coronavirus development. Short term rates have steadily moved down but long term rates have bounced around a lot.  Again, I'm not sure I have much to say. A lot of the movement on the long end may have been related more to market disequilibrium than to any systematic trends or expectations.  Again, I am in waiting mode.

Inflation expectations have declined to less than 1%.  As long as that is the case, there is probably a pretty tight limit to how high long term rates will go.

The one thing that might be even slightly informative this month is the expected low point of the Federal Funds Rate.  It had been at September 21 for a while, suggesting that Fed policy was expected to allow some sort of economic contraction that would settle in for more than a year.

But, the coronavirus has made everything suddenly more acute and one interesting result of that is that the expected low point of the Fed Funds Rate is now March 2021. It had gone as early as September 2020, but that might have been related to short term market disequilibria.

If this holds up, it suggests that the Fed has been spurred into a more vigorous reaction, and even though the recession will be much deeper than whatever was going to happen, we might recover more quickly because the Fed has jumped from a "minding the store" approach to a "whatever it takes" approach.

We have suddenly switched from a set of fiscal and monetary approaches that were, mistakenly, aimed at making American household assets illiquid, to a new approach where the Treasury and Fed are creating liquidity wherever they can.  Because the bias for the past decade has been so far in the other direction, there is a lot to be gained by this.

But, of course, the virus creates many uncertainties.

14 comments:

  1. I am surprised the stock market has held up as well as it has. I would think a 50% haircut is in order, but we are seeing only a 25% reduction now.

    Perhaps this half-size reduction is due to the federal government responding to the crisis with large outlays and abundant quantitative easing.

    It makes one wonder if the federal government and central bank had responded to the 2008 financial collapse in this mannrt, could have the bulk of that recession been sidestepped?

    Even with the spending and quantitative easing, the market says no inflation pending. Perhaps Japan is instructive in this regard.

    A month has passed and yesterday's libertarians are statist martinets and MMT is de facto policy?

    ReplyDelete
    Replies
    1. There is little question that 2008 could have been greatly avoided with more aggressive monetary action.

      Interest on reserves in October 2008 was pretty damaging, in addition to everything else.

      Delete
    2. Hello viewers around the Globe, I was despondent because i had a very small penis, about 2.5 inches soft and 4 inches hard not nice enough to satisfy a woman, i have been in so many relationship, but cut off because of my situation, i have used so many product which doctors for me, but none could offer me the help i searched for. i saw some few comments on the INTERNET about this specialist called Dr,OLU and decided to contact him on his email: Drolusolutinthome@gmail.com) so I decided to give his herbal product a try. i emailed him and he got back to me, he gave me some comforting words with his herbal pills for Penis Enlargement, Within 3 week of it, i began to feel the enlargement was surprised when she said that she is satisfied with my sex and i have got a large penis. Am so happy, thanks to Dr OLU I also learn that Dr OLU also help with Breast Enlargement Hips and Bums Enlargement etc.. If you are in any situation with a little Penis, weak ejaculation, small breast_hips_bums do get to Dr OLU now for help on his email (Drolusolutionhome@gmail.com) or add him on whatsapp line +2348140654426 

      Delete
    3. This is another testimony on how Chief Dr Lucky cured my HIV disease. Do you need a cure for your HIV disease? Do you want to be cured from your cancer disease? Or you want to be free from any type of disease. Kindly visit his website https://chiefdrluckyherbaltherapy.wordpress.com/ , he just cured my HIV disease and I’m very grateful to him, he is the only herbalist that can cure you.  
      WhatsApp number : +2348132777335 
      Via Email : chiefdrlucky@gmail.com
      Thank you all for reading,
      God bless"

      Delete
  2. IOR! I still can't believe that the narrative was (is!) that the Fed CUT rates to zero, when in fact, IOR was raised. It had been zero for 95 years and it was raised. If memory serves, it was at least 1% in the beginning. And Libor went higher than 3% or 4% in October.

    ReplyDelete
  3. Happiness is all i see now, i was herpes sicker for 6 years but i thank God for directing my footsteps to Dr Emu, he gave me instructions and i followed and in 2 weeks i was completely cured using his medicine, I am now Herpes Negative Contact Dr Emu for more information, He also has other cure to other ailment, HIV AIDS, CANCER, DIABETES, HEART DISEASE, HEPATITIS B/C And also restore broken relationships such as Ex HUSBAND, Ex WIFE, BROKEN MARRIAGES, Any kind of Problem in any relationship can be restore back in 24hours, Just Email: emutemple@gmail.com  Whatsapp or call: +2347012841542

    ReplyDelete
  4. I am here to give testimony on how this powerful spell caster called Dr. padman helped me to fix my relationship. I was heartbroken when my Lover told me he is no longer interested in marrying me because another lady has used a black magic on him. I cried and sobbed every day, until it got so bad that I reached out to the Internet for help, that was when i read a review about the great work of Dr. padman then contacted him for help to get my love and my life back, he helped me cast a powerful love spell and to my greatest surprise after 24 hours of doing the love spell my lover came back on his knees begging me to forgive him We are now happily married and all thanks goes to Dr. Padman Wonders for helping me save my relationship you can contact Dr padman via Email padmanlovespell@yahoo.com or info@padmanspell.com Website: https://padmanspell.com/index-3.html or WhatsApp +19492293867

    ReplyDelete
  5. Natural herbs have cured so many illness that drugs and injection can’t cure. I've seen the great importance of natural herbs and the wonderful work they have done in people's lives. i read people's testimonies online on how they were cured of HERPES, HIV, diabetics etc by Dr Edes herbal medicine, so i decided to contact the doctor because i know nature has the power to heal anything. I was diagnosed with Herpes for the past 3 years but Dr Edes cured me with his herbs and i referred my aunt and her husband to him immediately because they were both suffering from Herpes but to God be the glory, they were cured too .I know is hard to believe but am a living testimony. There is no harm trying herbs, Thanks. Write him on WhatsApp on +2348151937428. @dr_edes_remedies deals with
    (1)Alzheimer virus
    (2)Cancer
    (3)HIV
    (4)Herpes
    (5)Genital warts
    (6)ALS
    (7)Virginal infection
    (8)HPV
    (9)Hepatitis
    (10)Asthma
    Email him on dredeshome@gmail.com
    https://dredesherbalhome.weebly.com/product-order.html
    https://www.youtube.com/channel/UCWhBHvtpo772EWAEdsFWmWQ

    ReplyDelete
  6. Omg I Finally Got Helped  !! I'm so excited right now, I just have to share my testimony on this Forum.. The feeling of being loved takes away so much burden from our shoulders. I had all this but I made a big mistake when I cheated on my wife with another woman  and my wife left me for over 4 months after she found out..  I was lonely, sad and devastated. Luckily I was directed to a very powerful spell caster Dr Emu who helped me cast a spell of reconciliation on our Relationship and he brought back my wife and now she loves me far more than ever.. I'm so happy with life now. Thank you so much Dr Emu, kindly Contact  Dr Emu Today and get any kind of help you want.. Via Email emutemple@gmail.com or Call/WhatsApp +2347012841542

    ReplyDelete
  7. DR OYAGU herbal medicine is a good remedy for herpes simplex virus cure. My name is MIGNON WRIGHT , am from USA,I am here to give my testimony about DR OYAGU who helped me in my life, i want to inform the public how i was cured from (HERPES SIMPLEX VIRUS) by DR OYAGU, i visited different hospital but they gave me list of drugs like Familiar, Zovirax, and Valtrex which is very expensive to treat the symptoms and never cured me. I was browsing through the Internet searching for remedy on HERPES and i saw comment of people talking about how DR OYAGU cured them, when i contacted him he gave me hope and send a Herbal medicine to me that i took and it seriously worked for me, am a free person now without any problem, my HERPES result came out negative, I pray to God to never let me and my family forget you in our life, am now cured permanently, you can also get your self cured my friends if you really need this doctor help, you can reach him on his website ;https://oyaguspellcaster.wixsite.com/oyaguherbalhome Email: oyaguherbalhome@gmail.com or via whatsapp +2348101755322

    ReplyDelete
  8. To know more about Chief Dr Lucky you can visit his website (https://chiefdrluckyherbaltherapy.wordpress.com/)
     
     A friend that suffered from Herpes and was cure with the help of this great herbal doctor Chief Lucky so i decided to contact him for help in getting rid of my families genital herpes virus 1/2 which i did and all i was told to provide was just some useful information and some materials used in preparation of the natural cure and that i did and now i am the happiest person on earth because i am writing this testimony of mine with joy and happiness in my heart to the whole world to know that natural remedy is real because i am a living testimony of Chief Lucky traditional herbal cure and i want you all to contact Chief Lucky via his email: chiefdrlucky@gmail.com or WhatsApp him +2348132777335 am sure he will help you too.

    ReplyDelete
  9. I am here to explore blogs forum about the wonderful and most safe cure for HERPES SIMPLEX VIRUS . I was positive to the deadly Virus called HERPES and i lost hope completely because i was rejected even by my closet friends. i searched online to know and inquire about cure for HERPES and i saw Dr ERAYO testimony online on how he was cured so many persons from Herpes Disease. so i decided to contact the great herbalist because i know that nature has the power to heal everything. i contacted him to know how he can help me and he told me never to worry that he will help me with the natural herbs from God! after 2 days of contacting him, he told me that the cure has been ready and he sent it to me via FEDEX or DHL and it got to me after 4 days! i used the medicine as he instructed me (MORNING and EVENING) and i was cured! its really like a dream but i'm so happy! that's the reason i decided to also add more comment of Him so that more people can be saved just like me! and if you need his help, contact his Email: (drerayoherbalhome@gmail.com) you can contact him on whatsapp +2348151937428.
    He also cure the below listed sickness;
    (1) HERPES,
    (2) DIABETES,
    (3) HIV&AIDS,
    (4) URINARY TRACT INFECTION,
    (5) HEPATITIS B,
    (6) IMPOTENCE,
    (7) BARENESS/INFERTILITY
    (8) DIARRHEA
    (9) ASTHMA...
    https://alternativeherbs.weebly.com

    ReplyDelete
  10. The author has discussed a very resourceful topic in times of the pandemic. We, as a nation, cannot keep our children out of schools forever. Hence a plan needs to be implemented where children can safely go to school without getting mass infected. However, it is not recommended for parents or children to go physically to the shops for book supplies. Hence there is a need for an online book shop such as KitaabNow.

    ReplyDelete