Trump Optimism Bubble Almost Gone In 10Y-2Y Treasury Curve Slope (On The Good Ship Bubble Pop …)

When Donald Trump was elected on November 8, 2016, investors were overjoyed at the thought of deregulating the economy, repealing Obamacare and (at least) parts of the Dodd-Frank financial regulations.

But as time passes and investors realize that there is considerable resistance in Congress to doing most anything, the 10Y-2Y Treasury yield curve slope has almost returned to where it was on election day.

The likelihood of a Fed Funds Target Rate increase at tomorrow’s FOMC meeting is 12.8% according to Fed Funds futures.

But it looks like the Fed Funds rate will be increasing.

Hopefully future rate increases don’t pop our asset bubbles!

Fed Chair Janet Yellen on the good ship Bubble Pop,

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One thought on “Trump Optimism Bubble Almost Gone In 10Y-2Y Treasury Curve Slope (On The Good Ship Bubble Pop …)

  1. The Fed is DESPERATE to get as far off the Zero Bound as they can before the economy tips into full-blown recession. They must be able to appear to be “doing something” (cutting rates again) once the recession is obvious. With the US being the world’s biggest international debtor (by far), the Fed may not be able to get away with going negative on interest rates – thus the seemingly crazy sense of urgency to raise rates at a time when the economy seems on the verge of rolling over.

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