Macro Quick Hit: Treasury Supply, Bond Yields, and the Shape of the Curve
In the attached Macro Quick Hit we discuss fiscal trends and the impact on Treasury issuance. We then combine this with the expected path of the fed funds rate and Fed balance sheet wind down to illustrate a path for longer-term Treasury yields. Our statistical model implies a moderately steeper backup in bond yields than our central forecast of a 10-year Treasury yield at 3.25% at the end of 2018 and 4% at the end of 2019. Fiscal trends and the runoff of Fed Treasury holdings will also likely act against a further significant flattening of the Treasury yield curve this year and next.
RDQ Economics provides global macroeconomic consulting services with an emphasis on U.S. economic fundamentals and monetary policy.
Our views are driven by consistent application of classical economic and monetary principles and has generated superior anticipation of changes in the stance of monetary policy and of movements in economic growth and inflation.
The founders of RDQ Economics, John Ryding and Conrad DeQuadros, have a combined experience of 26 years on Wall Street, 12 years of experience in central banking at the Federal Reserve and the Bank of England and nine years in the independent research space. John and Conrad have worked closely with fixed income, foreign exchange, and equity traders and portfolio managers, which has enabled their analysis and advice to be tailored to a clientele that is focused on trading and investment decisions.
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