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,