The Institutional Risk Analyst

In the strange world of Washington, speaking truth in public is a capital crime. Truth is often revealed accidentally.

Remember, for every $1 in debt redeemed on the books of the Fed, a bank deposit disappears.

A year ago the two year was yielding 1.35%, but today is 2.6%. The 10-year Treasury note, on the other hand, has barely moved in a year, 2.2% then vs 2.85% today. Last we looked, Treasury 2s vs 10s was 25bp compared to almost a point a year ago. What a flattening yield curve and tight spreads say to us is that while the FOMC may raise short-term rate targets, in fact the demand for longer duration assets remains very strong indeed. Turkey or not, the 10-year rejects three