10yr treasury < Fed Funds rate

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Time2Quit
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10yr treasury < Fed Funds rate

Post by Time2Quit » Thu Jan 03, 2019 7:32 pm

With the 10yr treasury yielding less than the Federal Fund rate, could this in theory cause a credit crunch?
"It is not the man who has too little, but the man who craves more, that is poor." --Seneca

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whodidntante
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Re: 10yr treasury < Fed Funds rate

Post by whodidntante » Thu Jan 03, 2019 7:40 pm

I don't know. What's a credit crunch?

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Time2Quit
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Re: 10yr treasury < Fed Funds rate

Post by Time2Quit » Thu Jan 03, 2019 9:17 pm

whodidntante wrote:
Thu Jan 03, 2019 7:40 pm
I don't know. What's a credit crunch?
Ok I will bite.

https://www.investopedia.com/terms/c/creditcrunch.asp
"It is not the man who has too little, but the man who craves more, that is poor." --Seneca

NYC_Guy
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Re: 10yr treasury < Fed Funds rate

Post by NYC_Guy » Thu Jan 03, 2019 9:52 pm

Not by itself. Inverted yield curves are more a predictor of a coming recession. A credit crunch requires a series of (mis) steps by a central bank.

desafinado
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Re: 10yr treasury < Fed Funds rate

Post by desafinado » Thu Jan 03, 2019 10:55 pm

I'm also curious about the spike in LIBOR/SOFR we've seen over the last few days of over 50 bps. Any insights?

fennewaldaj
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Re: 10yr treasury < Fed Funds rate

Post by fennewaldaj » Thu Jan 03, 2019 11:51 pm

I wish bond yields would quit declining. They were finally starting to look decent a few months ago. It looks like the 10 year is still above the federal funds rate but the 5 and 7 are not.

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jeffyscott
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Re: 10yr treasury < Fed Funds rate

Post by jeffyscott » Fri Jan 04, 2019 9:13 am

fennewaldaj wrote:
Thu Jan 03, 2019 11:51 pm
I wish bond yields would quit declining. They were finally starting to look decent a few months ago. It looks like the 10 year is still above the federal funds rate but the 5 and 7 are not.
I was about to say TIPS are still >1% real, then I looked and saw that they just dropped to 0.88% for 5, 7, and 10 year terms.

Brokered CD yields have not declined as much as treasuries, the spread is ~1% for 5 year.
Time is your friend; impulse is your enemy. - John C. Bogle

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