Friday, July 19, 2019

"Fed Panic! 10-Year Vs 3-Month Yield Curve Spread Un-Inverts"

It will take someone more knowledgeable than I to determine if "Un-inverts" meets the high standards of the BuzzFeed Style Guide. As to whether the change in the shape of the curve matters?

From Mish Shedlock at Mish Talk:

Over the past few weeks the 10-yr to 3-month inversion shank. That portion of the curve is no longer inverted. So what?

Fed Panic
The Fed will cut a minimum of 25 basis points on July 31.
The CME Fed fund futures model jumped to 71% Chance of a 50 Basis Point Cut as New York Fed president John Williams said “When you have only so much stimulus at your disposal, it pays to act quickly to lower rates at the first sign of economic distress.”
Williams attempted to downplay that statement with a subsequent and obviously transparent excuse: "This was an academic speech on 20 years of research. It was not about potential policy actions at the upcoming FOMC meeting."

Yeah. Right.
Let's call this for what it really is: Fed panic with a hedge.
Earnings Recession Warning
James Bianco at Bianco research says Market needs a deep rate cut to prevent an earnings recession
I had to read that twice.
  • Is the Fed supposed to be worried about S&P 500 earnings?
  • Is that part of the Fed model?