- Longer-term bond yields have fallen recently, seeming to indicate that investors believe that economic growth is not that strong and that inflation will not be a major factor.
- This attitude shows up in the flattening of the Treasury yield curve, which now projects that future short-term interest rates will not be much higher than current short-term interest rates.
- This picture is consistent with the feeling that the Federal Reserve will have to back off its current accommodative monetary stance where it buys $120.0 billion in securities every month.
- All this points to a bumpy road for Fed Chair Jerome Powell and the Fed as it attempts to manage its way out of its current aggressive quantitative easing stance.
For further details see:
Lower Bond Yields: Investors Are Seeing Less Economic Growth And Lower Rates Of Inflation