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Changes to Fed Funds curve for next 30 years.
I thought I'd go through the previous implied Fed Funds and Treasury 1 Year Forwards model and update it from August 14th, before QE2 policy was announced.
Here is a good cross section showing changes in expectations between then and today. So far, I'd say Bernanke has successfully steepened the yield curve, helping support future bank recapitalization. As well, it doesn't need to be stated (but I will anyway) inflation expectations are considerably different. That will obviously translate over to PPI and CPI in the coming months, given the recent commodity price moves.
And the number of rate hikes to expect in coming years, given market expectations synthesized from the same treasury curve:
Note: The horizontal axis is a date range of two years, with overlap per data point. The original model implied rate changes and rates starting at August 14th, 2010, whereas the second model is run 3 months later, so a slightly more accurate interpretation has December data square on 2011, 2012, etc whereas the original data represents August to August periods, starting August 2010-2011. Since this is framing a 30 year picture, I felt it would be unnecessary to reflect this 3 month offset. Imagine it if you need.
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When the rate jumps to 4.5% mortgages will jump to 8% - 10%. That will demolish the real estate market causing $5 trillion in defaults. Is everyone blind? There is no way out. You shall be assimilated.
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God Bless Wall Street Crooks and the Political Inept!! It’s like “Corky” Runs the Country from the TV show Life Goes On!
Huh? Can we expect more fluffy CPI numbers? I'm curious as to what Shadow Stats has to say about this?
Huh? Can we expect more fluffy CPI numbers? I'm curious as to what Shadow Stats has to say about this?
exactly. it is The Fed's dream for it to work out this well.
That is actually the goldilocks scenario. Let is hope futures predictions are better than my spelling.
playing with the numbers don't change the truth.
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