interest rates

At least initially, rate increases can be procyclical. Moreover, in this particular cycle, fiscal and regulatory policy are acting procyclically too. That means you need a lot of rate hikes to get a big anti-cyclical effect.

The yield curve has steepened to where 10-year yields exceed 2-year yields by 52 basis points. While this may seem like a case of market whiplash, it's not. It's what should be expected in a late cycle rate hike regime.

Global growth has been slowing. But we have plenty of time before a recession or financial crisis hits. My worries are about financial fragility caused by high asset prices and corporate releveraging.

We should expect the Fed's tightening to continue. But a lot of the recent incoming data has been soft. And while this may just be a blip, I expect the curve to flatten further by mid-year.

Given what I know about the Fed's reaction function, I believe pre-conditions favor Fed tightening irrespective of the slope of the yield curve.

When China builds a trade surplus, it accumulates dollars. And it has to do something with those dollars. That means its purchase of US dollar assets is non-discretionary unless it revalues its currency.

Former Fed insider Daielle DiMartino Booth knows the Fed will be out of bullets at the next recession. Even so, its Chairman Jay Powell is now desperately trying to create as much runway as possible.

Federal Reserve governor Lael Brainard gave a speech on financial stability yesterday afternoon. The big takeaway is that the "Powell Put" is not very strong. The Fed will stress economic tailwinds and inflation concerns. And it will not…

The upward momentum for US stocks has broken. The S&P 500 closed below it's 200-day moving average for the first time since March 2016. Chief among the factors causing alarm was China's decision to retaliate against US tariffs. More…

Quick post here. I caught a tweet by Bloomberg's Lisa Abramowicz this morning noting that the yield curve was at its flattest since the Great Financial Crisis. Looking at the data, I noted that the 10-year bond is trading at only 49 basis…