December 6, 2019
Short term rates (one year or less) over the past eight weeks have continued to drop. They are down about 15-20 basis points and have dropped about 90-95 basis points since the beginning of the year. The Fed starting cutting rates in late December (2018) and has dropped the Fed Funds rate about 75 basis points. The middle and longer term rates over the past eight weeks have seen a slight uptick of about 10-20 basis points although we are still 70-80 basis points lower since the beginning of the year. Ten year money has seen a similar pattern with the market closing at 1.67% today It has been moving in a narrow range between 1.60% and 1.95%. Most central banks continue with an accommodative stance and some are still negative. With the recent drop in short term rates and slight increase in longer term rates, the yield curve has again returned to a more normal slope. The spread between three month T-bills and 10 year bonds is now a positive 31 basis points. The dollar has been stable against most major currencies over the past eight weeks.
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