Twisted! LIBOR 3M Hits Highest Level Since End Of The Great Recession (Treasury Curve Twisted Since 06/30/09)

The London Interbank Offered Rate (LIBOR) has now reached its highest level since the end of The Great Recession in June 2009. LIBOR is important since many contract are indexed to it.


I guess we can say the same thing about The Fed Funds Target Rate (UB) — it too is at its highest rate since June 2009 with only two rate increases.


How has the US Treasury yield curve shifted between June 30, 2009 and today? The 1 year Treasury yield is 44 basis points higher today while the 10 year Treasury yield is around 100 basis points lower. Essentially, the Treasury yield curve has been twisted since the end of The Great Recession.


This is a character from the PlayStation game Twisted Metal, NOT Fed Chair Janet Yellen. Yellen’s hair is white and shorter.


Roll Out The Barrel: Real Personal Spending Lowest Since September 2009 As Fed Rate Hike Probability Hits 82%

Today’s economic news feed should be of interest to the The Federal Reserve.

Core Personal Consumption Expenditures (sans food and energy) for January were +0.3% MoM and +1.7% YoY, below The Fed’s target inflation rate of +2.0%.


Of particular note is Real Personal Spending for January 2017. It fell -0.3% from December and is the lowest since September 2009, just after the end of The Great Recession in June 2009.


And Real Disposable Personal Income YoY has been dropping steadily since January 2015.


Inflation under 2% and declining Real Disposable Income YoY. Not pretty.

So, of course, the market is betting on The Fed RAISING rates at the March 15 FOMC meeting. In fact, the current implied probability of a rate hike in the range of 0.75-1% is 82%.


Yes, there is little doubt that the Fed Funds rate will be rising over time.


I guess it is time to Roll Out The Barrel and play the Beer Barrel polka!