08-28-2018, 06:08 AM
Following the Jackson Hole conference and a major dose of Fed-speak / Open Mouth Policy, here are the forward rate predictions built into prices and curves at today's close:
Fed funds policy rate (mid): Sept up to 2.125%, NEXT Mar-19 up to 2.375%, THEN Sept-19 up to 2.625. That's it....end of hikes for this cycle!
5yr Treasury note yield five years forward (Q3-2023): 2.91%
5yr TIPs yield five years forward: 0.71%
Treasury/TIPs breakeven inflation expectations: 5yrs: 2% 10yrs: 2.10% 30yrs: 2.12%
Those are the forward rate predictions currently built into the curve and prices, values established by current equilibrium prices resulting from the market interactions of all global dollar rate traders, investors and speculators.
Aside: Equity touts will be shouting next week about the Fed Atlanta current Q3 GDP estimate of 4.6%. BUT the Fed NY model preducts 2.0%, the Blue Chip economists average estimate is about 3.1%, and the ECRI leading indicators growth rate has dropped to zero, suggesting a serious decline in GDP growth in H1-2019.
All of this inspires me to use next week to get fully invested in income CEFs with earned yields in the high 7%'s and 8+%. What do you think?
Regards,
Kelsey
Fed funds policy rate (mid): Sept up to 2.125%, NEXT Mar-19 up to 2.375%, THEN Sept-19 up to 2.625. That's it....end of hikes for this cycle!
5yr Treasury note yield five years forward (Q3-2023): 2.91%
5yr TIPs yield five years forward: 0.71%
Treasury/TIPs breakeven inflation expectations: 5yrs: 2% 10yrs: 2.10% 30yrs: 2.12%
Those are the forward rate predictions currently built into the curve and prices, values established by current equilibrium prices resulting from the market interactions of all global dollar rate traders, investors and speculators.
Aside: Equity touts will be shouting next week about the Fed Atlanta current Q3 GDP estimate of 4.6%. BUT the Fed NY model preducts 2.0%, the Blue Chip economists average estimate is about 3.1%, and the ECRI leading indicators growth rate has dropped to zero, suggesting a serious decline in GDP growth in H1-2019.
All of this inspires me to use next week to get fully invested in income CEFs with earned yields in the high 7%'s and 8+%. What do you think?
Regards,
Kelsey