Yield Curve more or less flat
- Thread starter The Kin
- Start date
While the yield curve is important, it's the availability of credit that is ultimately decisive.
Treasuries to corporates should be an even better indicator according to modern economics. One should keep an eye on this.
The question is though, how long is the lag? Classic estimates say it takes between 1/2 year and 1 1/2 years for Fed rate hikes to ooze through the whole economy. But that ain't necessarily so.
FRANKFURT (Dow Jones)--Below is a transcript of European Central Bank
President Jean-Claude Trichet's remarks on interest rates provided by the ECB:
"After two and a half years of maintaining interest rates at a level
historically exceptionally low, I would consider that the governing council is
ready to take a decision to move interest rates and to moderately augment the
present level of ECB rates in order to take into account the level of risks to
price stability that have been identified. We would thus withdraw some of the
accommodation which is embedded in the present monetary policy stance, while
the policy would remain accommodative.
This move would aim at coping with inflationary risks in order to maintain
and preserve full confidence in price stability, and to continue solidly
anchoring inflation expectations. This move would therefore contribute to
sustainable growth and job creation in the euro area."
-Frankfurt Bureau, Dow Jones Newswires; 49-69-29725-500
(END) Dow Jones Newswires
11-18-05 1202ET
Copyright (c) 2005 Dow Jones & Company, Inc.
President Jean-Claude Trichet's remarks on interest rates provided by the ECB:
"After two and a half years of maintaining interest rates at a level
historically exceptionally low, I would consider that the governing council is
ready to take a decision to move interest rates and to moderately augment the
present level of ECB rates in order to take into account the level of risks to
price stability that have been identified. We would thus withdraw some of the
accommodation which is embedded in the present monetary policy stance, while
the policy would remain accommodative.
This move would aim at coping with inflationary risks in order to maintain
and preserve full confidence in price stability, and to continue solidly
anchoring inflation expectations. This move would therefore contribute to
sustainable growth and job creation in the euro area."
-Frankfurt Bureau, Dow Jones Newswires; 49-69-29725-500
(END) Dow Jones Newswires
11-18-05 1202ET
Copyright (c) 2005 Dow Jones & Company, Inc.
Q
http://today.reuters.com/investing/...118:MTFH51836_2005-11-18_18-42-39_N18729363:1
U.S. Senate approves $60 billion tax-cut bill
Fri Nov 18, 2005 1:42 PM ET By Donna Smith
WASHINGTON, Nov 18 (Reuters) - The U.S. Senate on Friday approved a bill that would extend $60 billion in tax cuts for individuals and business but impose a $5 billion tax on big oil companies, drawing a veto threat from the White House.
UQ
http://today.reuters.com/investing/...118:MTFH51836_2005-11-18_18-42-39_N18729363:1
U.S. Senate approves $60 billion tax-cut bill
Fri Nov 18, 2005 1:42 PM ET By Donna Smith
WASHINGTON, Nov 18 (Reuters) - The U.S. Senate on Friday approved a bill that would extend $60 billion in tax cuts for individuals and business but impose a $5 billion tax on big oil companies, drawing a veto threat from the White House.
UQ
The effect of the flattening of the yield curve will be seen in financials before other sectors. In this case it will be more prudent to short financials(XLF) and long (SPY) in an appropriate ratio as per your risk. If the trade moves in your favour and the yield curve starts inverting, it makes sense to remove the SPY hedge.
why financials? i heard somebody was buying all the financials he could when greenspan unexpectedly *lowered* rates in 2001.
ok i did a little research myself. isn't it usual banks lend "long" money and borrow short?
In that case a yield curve going inverted should indeed mean bad news for banks. I am not sure that's all there is though. and the reason why the guy was buying banks on the rate cut is because the short money suddenly got very cheap for the banks.
In that case a yield curve going inverted should indeed mean bad news for banks. I am not sure that's all there is though. and the reason why the guy was buying banks on the rate cut is because the short money suddenly got very cheap for the banks.