September 2020 Yield Curve Update
Kevin Erdmann | Oct 05, 2020 12:17AM ET
The eurodollar yield curve continues to slowly show optimism. The long end of the curve continues to climb. It's now back up above the yields of early April.
This suggests that the market foresees continued relatively strong recovery in employment and that the Fed is adequately providing liquidity. Forward inflation expectations have leveled out below 2%, but they are basically as high as they were before the Covid-19 outbreak. That's probably reasonably good news. And, the expected date of the first rate hike is settling in around the June 2021 contract, which is pretty bullish. The market seems to think recovery is in the works.
Both because there is an endemic lack of adequate supply and because of some of the demand responses to Covid-19, residential investment should be strong to help with a continuation of positive trends. This suggests to me that if there is much of a pullback in stocks, it will be from an unforeseen negative real shock.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.