Although it is safe to expect that the yield curve tends towards flattening during a rate hike cycle, the current movement in the 2-/10-year slope is relatively dramatic (figure above). This article discusses some of the mechanics of how slopes are traded.
Bond Economics
Brian Romanchuk's commentary and books on bond market economics.
Recent Posts
Tuesday, August 9, 2022
Wednesday, August 3, 2022
Fractional Reserve Banking And "Fraud"
Although I like the title of my banking primer “Fractional Reserve Banking and its Discontents,” the problem is that I need to deal with some really loopy theories.
The economist Robert Solow provided us with a very good quote regarding the dilemma of such discussions.
Suppose someone sits down where you are sitting right now and announces to me that he is Napoleon Bonaparte. The last thing I want to do with him is to get involved in a technical discussion of cavalry tactics at the Battle of Austerlitz. If I do that, I'm getting tacitly drawn into the game that he is Napoleon Bonaparte.
Thursday, July 28, 2022
"Technical Recession" (Sigh)
Since I am catching up with everything, I am unable to do a detailed analysis. If I do anything, I will postpone it until next week. I just want to add yet more words to the “is is a recession?” debate.
My view is straightforward: the NBER declares U.S. recessions, and I am not going to refer to a downturn in U.S. data as a “recession” unless the NBER has declared one. The thing to keep in mind that the declaration can arrive with a considerable lag, so I have no issues with texts arguing that one is currently in progress without the NBER committee declaring anything, so long as that condition is noted. i