October 10, 2019
Short term rates over the past month have dropped about 25 basis points while middle term rates are stable and long term rates are up about 10 basis points. After slipping under 2.00% at the beginning of September, 30 Year Treasuries have moved up about 20 bps to 2.16% Ten year money has seen a similar pattern with the market closing at 1.67% today. The Fed cut (for the second time in as many months) the Fed Funds Rate by 25 bps on September 19 and short term rates immediately responded in kind. The rate now stands at 1.75%. The economy worldwide seems to be continuing to slow and the trade tensions with China and others aren’t helping. Most central banks have been cutting rates and several have gone negative. The German 10 year bond is a NEGATIVE .47%. You pay them .47% to hold their debt. With the drop in short term rates the yield curve has become very flat, still inverted just not as much. The spread between three month T-bills and 10 year bonds is negative 1 basis point. The dollar continues its slow strengthening since the first of the year with most major currencies.
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