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Yields Reveal a Mini-Revolt On the Long End

  • 3-Month Yield: 0.04%
  • 1-Year Yield: 0.06%
  • 2-Year Yield: 0.11%
  • 3-Year Yield: 0.20%
  • 5-Year Yield: 0.50%
  • 10-Year Yield: 1.20%
  • 30-year Yield: 2.01%

Yield Curve Dramatically Steepens

Yield Spreads 2-10 and 2-30 201-02-14A

Notes

  1. In July of 2018 the spread between the spreads was only 12 basis points with the 2-30 spread at 38 basis points and the 2-10 spread at 26 basis points.
  2. The 2-30 spread at 1.83 is higher than any time since February 10, 2017.
  3. The 2-10 spread at 1.07 is higher than any time since April 7, 2017.

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Fed Losing Control of Long End

  1. On February 8, the Fed noted Monetary Policy Will Stay Accommodative For a Very Long Time. I commented "Like Forever".
  2. On February 10, in a speech on the labor market Powell said the True Unemployment Rate is Actually 10%

In Powell's speech, he reiterated the message rates would stay low.

But spreads have widened dramatically which begs the question: 

How long before the Fed openly intervenes to push rates lower on the long end of the curve?

Mish