Dollars and Jens
Tuesday, September 12, 2006
 
interest rates
Since the close on August 14 — not quite a month ago — the yield on 5 year dollar-notional treasury notes has dropped 25 basis points, while the yield on 5 year TIPS has increased 10 basis points. Since the last hike in the fed funds target, the nominal rate has dropped 50 basis points, with two thirds of that coming off the inflation spread.

If the federal reserve continues to hold short-term interest rates up while the neutral rate — supposing we believe in such a thing — drops, to what extent is it the case that the fed has ceased its tightening campaign?

- posted by dWj @ 9:38 PM
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