January 3, 2019

ONLY MS YELLEN AVOIDED THE ERROR:

Two-year yield dips below key Fed rate for first time since 2008 (Kate Duguid, 1/03/19, Reuters)

The fed funds effective rate, which was 2.4 percent on Thursday, moves within the Federal Reserve's key policy range of 2.25 to 2.5 percent. The market move suggests investors believe the U.S. central bank will not be able to continue to tighten monetary policy as its forecast suggests, after having lifted benchmark interest rates four times in 2018.

"This is a big deal," said Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets.

"The market is effectively saying that at some point in the next 24 months, the Fed is going to have to not only stop hiking, but actively start easing."

New Fed chairmen feel compelled to demonstrate their inflation bona fides, despite our being in a 30-year deflationary epoch.



Posted by at January 3, 2019 6:31 PM

  

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