Yield Curve Steepened Since January 3 but Portions Remain Inverted

On Jan 3, portions of the yield curve inverted with the Fed Funds rate. That's gone, but other inversions remain.

I created a spreadsheet that plots the yield curve from entered values.

The chart is to scale, starting with the Fed Funds Rate (F) then the 3-month bill (3), six month bill (6), then every three months with values between dates extrapolated uniformly.

Click on the charts for a sharper image.

Yield Curve 2019-01-07

Click on the chart to expand.

That's the curve at the moment. On January 3, portions of the curve inverted with the Fed Funds Rate.

Yield Curve 2019-01-03

On January 3, the effective Fed Funds rate was 2.40%. The yields between 2 years and 6 years inverted with the Fed Funds Rate.

Fed Funds Rate Inversions January 3

  • FF Rate: 2.40%
  • 2-year: 2.379%
  • 3-Year: 2.340%
  • 5-Year: 2.356%
  • 6-Year: 2.394% extrapolated

On January 4, Powell promised patience. I responded: So What? It Doesn't Matter

Following Powell's speech, inversions with the Fed Funds Rate ended.

Questions Linger

  1. Is the Bond Bull Market Over?
  2. What are the odds of recession? Rosenberg says History On Our Side.

Mike "Mish" Shedlock

Comments (7)
No. 1-4
Freebees2me
Freebees2me

Mish,

Appreciate the analysis.

Could this inversion represent the 'general consensus' (of market players) that the 'brain-trust' in-charge of our "Fiat Currency" will only be able to hold it together for so long? Let's say 7 years?

Best............

Mike Mish Shedlock
Mike Mish Shedlock

Editor

Still too early to talk about the demise of the dollar. The Eurozone, Japan, and China all have major issues. But yield spreads do sho concern over debt IMO.

channelstuffing
channelstuffing

Fed & Co. has put a floor under the "markets",they will not allow stocks to fall further,they've put a floor under oil,like I said previously central banks will not allow oil to drop below $40 a barrel.

Casual_Observer
Casual_Observer

Too obsessed with yield curve. See one of mauldin's recent letters on a more detailed explanation of why the yield curve is a symptom.