Icymi: U.S. Yield Crease To Invert Inwards Mid-2019, Morgan Stanley Says

From Bloomberg, July 11/12:

• Fed inwards March to map out halt to balance-sheet contraction: MS
• Net Treasury render seen smaller cheers to Fed residue canvas

The Federal Reserve side yesteryear side March volition likely map out an halt to the contraction inwards its residue sheet, helping back upward longer-dated bond yields, which volition driblet below those on shorter-dated notes yesteryear the pump of 2019, according to Morgan Stanley.

“Investors are underestimating the size of the SOMA portfolio” that volition endure needed to proceed the benchmark overnight involvement charge per unit of measurement inside the arrive at targeted yesteryear the Fed, Morgan Stanley strategists including Sam Elprince wrote inwards a July 12 note. SOMA refers to the System Open Market Account, the Fed’s cite for its puddle of assets.

• Morgan Stanley cutting its forecast for cyberspace U.S.A. regime debt issued yesteryear the Treasury yesteryear $690 billion through 2020
• The banking concern sees 10-year Treasury yields at 2.75 per centum yesteryear year-end, in addition to 2.50 per centum yesteryear mid-2019. It previously forecast them at 2.85 per centum for end-2018 in addition to 2.70 per centum for the minute quarter of 2019.
• The yield crimp volition invert “by mid-2019,” the analysts said. “We advise an overweight to U.S.A. Treasuries.”

The Fed started shrinking its residue canvas final October, unwinding the unprecedented quantitative easing launched during the fiscal crisis. The recent phenomenon of the effective federal funds charge per unit of measurement trading toward the upper halt of the Fed’s target arrive at has been a sign to simply about observers that liquidity may already endure getting tight....MORE

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Blackstone's Byron Wien: "No Recession inwards Sight" 
Our best gauge is marketplace downturn inwards 2019 in addition to recession inwards 2020.*
But to a greater extent than novel highs first.
Mr. Wien seems a fleck to a greater extent than optimistic...

San Francisco Fed: "Economic Forecasts alongside the Yield Curve"

And from final December:

Interpreting the Yield Curve: Counterintuitive Stimulative Effects of Rate Hikes
The writer, David Andolfatto is Vice President of the Federal Reserve Bank of St. Louis.
Views should inwards no means endure attributed to the Federal Reserve Bank of St. Louis, or to the Federal Reserve System.
Neither should the spider web log endure taken equally an endorsement of the fashion feel of the Federal Reserve Economics Data clothing line:

The FRED Team

Posted in FRED Announcements

From Macromania.....