Saturday, December 18, 2010

Yield Curves: December 2010

We keep coming back to the yield curves because they give some measure of what people think of the economy. Despite the FEDs intervention they are going up again. We review this year herein. Here is a comparison of the curves for selected dates in 2010. The curve is beginning to come back up on the high end. Despite the FED's intention and actions in buying Treasury debt it seems to have had little if any effect.

A more detailed look is as follows:
Now we can look at the 30 day to 30 year spread itself as follows:

It has started up from the low point in early fall and seems to be targeting a much higher level. We reiterate some of these in a different form below. This gives spread and actual rates.

We show below the rates for 2009:

Note that they were flat across the year despite how bad a year it was. Now look at 2010:

This shows the FEDs attempted intervention and now it appears that the effects have been minimized. There was a drop in later spring and the rise has been much faster. It is worth looking at 2009 versus 2010 which is why we have presented the data.

One may speculate what is going to happen but the FED generally tries to fight inflation but doing so in light of high unemployment is difficult. It is not clear what effect the Fall election may also have had on these rates. We anticipate an increasing rise, yet that is speculative at best.