IPFS News Link • Federal Reserve
How Much Will the Fed Hike? 40 Years of History Shows the Brick Walls
• https://mishtalk.com, By MishThe above chart shows the Federal Funds Rate (FFR) vs the yield on various US Treasury notes.
Data is monthly averages except the current point is today.
I picked this idea up from Steve Matthews, Bloomberg Business Reporter.
"There is a 50-year history that the Fed never hikes rates once the fed funds rate has risen above the five-year yield. That point could come before the end of 2022, and suggests that it will be very difficult to continue."
— Steve Matthews (@SteveMatthews12) February 16, 2022
--@JohnAuthers, @BOpinion https://t.co/UuaoXgOBcK pic.twitter.com/YtBTdgnOZC
"There is a 50-year history that the Fed never hikes rates once the fed funds rate has risen above the five-year yield. That point could come before the end of 2022, and suggests that it will be very difficult to continue."
Read that carefully. Matthews did not say the Fed Fund Rate didn't top the yield on the 5-year note, only that once it did, the Fed stopped hiking.
This can happen by the Fed hiking or longer-term yield falling.