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
- Is the Bond Bull Market Over?
- What are the odds of recession? Rosenberg says History On Our Side.
Mike “Mish” Shedlock
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.
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.
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.
It depends on what you define as “demise” but that is likely too strong of a word. The dollar index has been dropping since the fall and I believe it will fall much more than it has in 2019.
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…………
Nahh, fiat currencies are here to stay forever.
That’s what debasers have been saying since the dawn of time. Never worked before, newer will.
They may be able to pull it off for awhile, but you can only rob your competent and productive people on behalf of mediocre leeches for so long. Mediocre people in charge of everything, means mediocre utilization of resources. Doubly so since even those less mediocre, are incentivized to emulate mediocrity as well.
Keep that up, and outsiders will eventually sack you. At the same time you’re collapsing from the inside, as ever more of dwindling resources, directed in a mediocre fashion by the mediocrities in charge, will have to be directed solely at holding outsiders at bay. And at suppressing revolt from less mediocre insiders.