Fed Meeting on Monday, April 5th at 11:30am

I'm still scratching my head to understand why they couldn't settle their crap, whatever it is, on their next FOMC meeting. What's the need for an "expedited" love fest and exactly what the hell are they planning to expedite? I doubt Bernanke will announce a "surprise! surprise!" rate change on Monday. If not, then what?
 
IIRC last time they raised discount was Feb 18th, announced right after RTH and ES dropped 8 pts; shrugged it off and rallied back overnight (maybe asia/eu data helped, dont remember)
 
I just pulled the April 2nd yield curve from the federal reserve website:

April 2010
Date 1 mo 3 mo 6 mo 1 yr 2 yr 3 yr 5 yr 7 yr 10 yr 20 yr 30 yr
04/01/10 0.16 0.16 0.24 0.42 1.05 1.63 2.59 3.32 3.89 4.58 4.74
04/02/10 0.15 0.16 0.26 0.46 1.11 1.70 2.67 3.40 3.96 4.65 4.81


Here's the link:

http://www.ustreas.gov/offices/domestic-finance/debt-management/interest-rate/yield.shtml

The yield curve was already ridiculous, but this new steepening feels like coming off the rails. Interestingly, the 1 month yield fell by 0.01. If they were going to be raising rates next week, I wouldn't have expected the short rates here to fall.

As confusing as all this is, it feels like a critical market juncture to me. I bet Soro's back is killing him, mine is.
 
Firstly, this is not a Federal Reserve website. It's a US Treasury Dept website.

Secondly, what's so ridiculous about this yield curve?

Thirdly, as I have mentioned in another thread, it's extremely improbable that the meeting on Monday has anything to do with the Fed doing anything with the funds rate. There's a whole variety of reasons for why that's the case.
 
Quote from Martinghoul:

Firstly, this is not a Federal Reserve website. It's a US Treasury Dept website.

Secondly, what's so ridiculous about this yield curve?

Thirdly, as I have mentioned in another thread, it's extremely improbable that the meeting on Monday has anything to do with the Fed doing anything with the funds rate. There's a whole variety of reasons for why that's the case.
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1: Thanks for the website correction.

2: I'm not going to get into an argument with you on here, but I will cite references so you can think for yourself. Buttonwood dedicated his column in this week's Economist magazine to the dangerously steep yield curve titled "Dangerous Curve". Here's a snippet:

So what does a very steep yield curve tell us? One possibility is that the economy is heading for a vigorous recovery. For one thing, long rates are a forecast of future short rates. So the markets are essentially predicting that the Federal Reserve will eventually increase rates because the economy has been restored to health. In addition a steep yield curve creates profitable opportunities for banks, which can borrow short-term at a low rate and lend to companies at a higher one. The Fed engineered a steep yield curve in the early 1990s to boost bank profits after the savings-and-loan crisis.

This time, however, a steep yield curve is hardly stimulating bank lending. Bank credit has contracted over the past 12 months. Big companies are turning away from the banks to the bond market as a result: high-yield bond issuance in March broke the previous monthly record. Smaller companies have found it more difficult to borrow money....
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And here's the link:

http://www.economist.com/business-finance/displaystory.cfm?story_id=15819178

I have yield curve data for US treasuries back to 1962 and let me assure you, we are in uncharted territory. The spread between the 1 year and the 10 year just made a historical high, and short yields are at historic lows. I've attached a chart of the spread since 1962.
 

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Agreed, we don't have to argue about this, as it is, really, all subjective. Moreover, I assure you I don't need to look at references, such as journalists' articles, to understand exactly what sort of territory we're in. I stare at this sh1te every day.

I just want to draw your attention to the fact that, contrary to what many Americans believe, the US is not the only country in the world with functioning govt bond markets. Have you ever looked at the shape of the gilt (UK guvvies) yield curve or the Aussie one?

Most of these things, over which many commentators get their knickers in a twist, have probably happened at one time or another and there's nothing particularly "uncharted" about them. This includes things like negative 10y spreads, high debt/GDP, auctions that don't go too well, etc.

In the end, it's all up to you and how bad you think things are. If you think the game that the CBs arnd the world are playing is going to work out, everything is gonna be just fine. Otherwise, we're all screwed, but what else is new?
 
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