MFOHome About Commentary Discussions Funds The Best Resources Support Us!

Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!

Sign In Register

Categories

In this Discussion

Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

    Support MFO

  • Donate through PayPal

Layoffs, Looming Slowdown, and the Fed's Fund Rate

beebee
edited November 7 in Other Investing
Interesting article in which the author compares the 2 Yr Treasury rate to the Feds Fund Rate.

Author blames the Fed for reacting too slowly to lowering rates as compared to what the 2 yr treasury was telling them.
The 2-year yield knows better than the 400 PhD economists working at the Fed what the FOMC ought to do with its target rate. The FOMC makes big mistakes when they think that they know better than the silly old bond market.
Fed Rate vs 2 Yr Treasury

Comments

  • DrVenture
    Isn't that only part of the picture? Not that I disagree. But, what of inflation? The jobs numbers have only recently solidified into a pattern, and inflation has been steadily trending upwards at the same time.

    What will they favor, if inflation continues to rise? At what point does inflation become more relevant than jobs? And what if GDP stays high, due to massive AI spending, putting its thumb on the scale?

    By the time the FED chair is replaced we may be looking at even higher inflation. What then?
  • Sven
    By the time the FED chair is replaced we may be looking at even higher inflation.
    It is highly the inflation will remain elevated well above the 2% target for extensive. With the tariffs being a progressive taxation, is it realistic to expect the inflation to decrease ?

    The FED is in a tough spot with its dual mandates : full employment and inflation below 2%. September’s 25 bps cut was meant for the labor rate concern over the elevated CPI. Unless the employment number stabilized, we may have seen the last rate cut for the year.
  • CrashCrash
    edited 3:58AM
    Should not have lowered the rate, both in Sept. AND Oct, '25. Inflation is not at target. The Big Ugly Bill will raise Fed deficit to $7.1T over ten years. How long does it take to even fathom such a number???? THEN, the only way out of the looming debt crisis is through more DELIBERATE inflation by shrinking the dollar, via printing lots more of them. Loaf of bread for $20.00? Ya. My decision to put money in overseas companies in countries which keep their houses in much better order looks better and better.
Sign In or Register to comment.