tag:blogger.com,1999:blog-6616959642391988608.post8312560952554135226..comments2024-03-28T00:18:25.641-07:00Comments on Calafia Beach Pundit: Fed + yield curve = end of recessionScott Grannishttp://www.blogger.com/profile/14028519647946868684noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-6616959642391988608.post-38316533965761146822009-04-09T19:57:00.000-07:002009-04-09T19:57:00.000-07:00I don't agree. The fact that the Fed is engaged in...I don't agree. The fact that the Fed is engaged in quantitative easing does not render the slope of the yield curve a meaningless variable. If the market thought that the US economy were really going to be facing a decade of deflation and depression, then it would not expect the Fed to raise rates by very much. In contrast, the current steepness of the curve implies a fair degree of tightening. Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-77167821251296784872009-04-09T00:04:00.000-07:002009-04-09T00:04:00.000-07:00The Fed's model will not work in our current predi...The Fed's model will not work in our current predicament. The historical relationship between the slope of the yield curve and the economy’s performance is due to the fact that the long-term rate is essentially a prediction of future short-term rates. If investors expect the economy to decline, they also expect the Fed to cut rates, which tends to make the yield curve downwardly sloped. If they Mark A. Sadowskihttps://www.blogger.com/profile/13147923641894915172noreply@blogger.com