Yield Curve Still Inverted Despite Fed Rate Cut
|Despite yesterday's rate cut and significant moves higher in long-dated treasury yields, numerous inversions remain.
Fed Fails to Un-Invert Yield Curve
Huge portions of the yield curve remain inverted, just not as deep as a few weeks ago.
At the long end, the 30-year bond yield rose from 1.938% on August 28 to 2.375 on September 15.
Today, the long bond yield is now back to 2.22%.
Fed Struggling with Rates
The Effective Fed Funds Rate should be in the range of 1.75% to 2.00% following yesterday's cut but it isn't.
Yesterday, the rate should have been in the middle of the range of 2.00% to 2.25% but was at the high end. On Monday it was at 2.30% and thus outside the range.
The Fed has been struggling for day keeping interest rates in its target range.
On September 17, I noted US Overnight Interest Rate Surges to 10%, Fed Injects Emergency $75 Billion.
10% is more than a bit outside the range but the effective FF rate closed at 2.30% following emergency injections. The emergency injections continued for a third day today and will continue for a fourth day tomorrow.
Something is very wrong somewhere.
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