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Yield Curve Still Inverted Despite Fed Rate Cut

Summary:
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

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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.

Mike "Mish" Shedlock

Mike Shedlock
Mike Shedlock (Mish) is a registered investment advisor representative for SitkaPacific Capital Management (http://www.sitkapacific.com/). Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

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