Why A Fed Rate Cut Would Steepen The Yield Curve
April 30, 5:00 pm EST
As we head into a Fed decision tomorrow, we’ve talked about the prospects of a Fed rate cut. It’s highly unlikely.
It’s even more unlikely today, after Trump pushed for, not just a cut, but a full point cut …
|
![](https://ci5.googleusercontent.com/proxy/w47_reM52w5r1QdBkQBa-T9pJue5zRZXaEVQVBVDCc0mEhvux2CY5tOy1C7GD_co5nVaNRr9njSd53-9ZJJfzjMe4Q0QmuXquIkRvNyG_PddD0hKRuHyeefSGFokR3T7RaCH38Z8gjdOqlOtTUmEzERdEmIsqui6fjW4vmGBSObE6_sS3K2JvLC8IMGJLCFiv9h4fTL81hIpF8NleklqUsZsKTSTWvZW2oi-tGCeguiM8jEhFb_4yL2xmFrn59xJa9pK7t-JsSXRdqFAIXUrMzRCz-o=s0-d-e1-ft#https://marketing-image-production.s3.amazonaws.com/uploads/b098a342a3c0a88768b7870dae75dd6c3ba9d198ff07970beb015d3dd6c53f7f2199b73981681bd21ff1c3e76bced7f5d4ab0a89a8a34bee5cc02bfeed590a67.jpg) |
Unfortunately, the influence Trump tried to wield late last year, is probably why the Fed hiked in December — just to prove to the world that they (the Fed) wouldn’t be politically influenced.
With that, we now have an economy growing at 3%+, stocks near record highs and subdued inflation. And yet we have a ten-year yield at 2.5%. It doesn’t fit. The interest rate market is still sending the message that the December rate hike was a mistake.
With that, if we did get a cut by this summer, I suspect the interest rate market would adjust to reflect a more optimistic economic outlook. By that, I mean, with a cut in the Fed funds rate, the long end of the yield curve (specifically, 10-year yields) would probably go UP not down –steepening the yield curve.
If you haven’t signed up for my Billionaire’s Portfolio, don’t delay … we’ve just had another big exit in our portfolio, and we’ve replaced it with the favorite stock of the most revered investor in corporate America — it’s a stock with double potential.
Join now and get your risk free access by signing up here.
|
|
|
|
|