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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: dpl who wrote (21395)1/14/2005 5:08:36 PM
From: mishedlo  Read Replies (1) | Respond to of 116555
 
"for the curve to invert we PROBABLY would need 2 more hikes minimum."
I don't understand this.The 10 yr is about 4 1/4 % and the FF is 2 1/4 %
It would take more than 2 hikes?
David

Nope...
The yield on the 5 yr is 3.71
The yield on the 10 is 4.21

Now it might take more than 2 hikes to close that gap but in theory it could take less (the 10 yr falls while the 5 year rises).

That said, two might be a tad optimistic, but any part of the curve could invert.

The 30 yr is 4.74
The 10 yr is 4.21

That one could easily cross on 2 more hikes

I do not have the 2 yr to 5 year spread. if someone has the symbol I will track it.

$tyx=30
$tnx=10
$fvx=5
$irx=3 month

I would really like to see a chart with all of those on it!
In ABSOLUTE terms NOT relative to each other terms.
No one yet has told me how to do that.
Mish



To: dpl who wrote (21395)1/15/2005 7:59:04 PM
From: SouthFloridaGuy  Read Replies (1) | Respond to of 116555
 
David, generally the yield curve inversion is based upon the 10 and 2 year, although different parts of the curve could or would invert before hand. Right now most participants in the hedge fund industry have "curve steepeners" and are getting killed. We could see a massive treasury rally once the shorts bail.

Right now the yield curve is pretty normal, though as I have read, key technical levels have been broken as it has continued to flatten.


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