Is it counter-productive of the Federal Reserve to lower the IOER? Or is the central bank beginning to lose or has already lost control over the short-term yield curve?
It’s time for last week’s blog post (it was intended for last week but got delayed until today), in which we’ll take a look at the results of our technical analyses on the 10-Year US Treasury Notes, between November 2016 and early July 2017.
2016 has come to an end, and we’re just hours away from 2017! I wish all readers a Happy New Year!
Since July 2016, the US Treasury yields (i.e. interest rates) have been steadily climbing, with the trend gaining considerable short-term strength after the election of Donald J. Trump as the 45th US President.
While the immediate market reaction is ascribed to several factors, including market participants expecting a pickup in inflation, as well as increased profits for banks (due to a presumed steepening of the yield curve), these factors are only part of the explanation.
The latest liqudiation wave started in the evening of November the 8th (US timezones), when it started to become clear that Donald Trump was winning the Electoral Vote.