Presented by Stifel, Nicolaus & Company, Inc.
Minutes from the Federal Open Market Committee’s May gathering indicated Fed officials are on track to raise rates again “soon,” and markets have priced a June hike as a near certainty. The Committee’s view of the overall economy remains generally positive, but the sustainability of recent price pressures remains a concern for the policymakers. Also of concern to the officials is the flattening yield curve. Even as the 10-year UST has recently crossed the 3% threshold, the front end of the curve has outpaced the benchmark, and the spread between the 2-year and 10-year UST has tightened to just 49 basis points. Further flattening will only evoke more unease as an inverted curve has preceded all major recessions in recent history. Today, the 10-year US note is yielding 3.06%, and the 30-year bond stands at 3.21%. In the tax-exempt market, both the 10-year and 30-year MMD climbed 4 basis points for the week to yield 2.55% and 3.07% respectively.
Interest Rate Observations
Source: Thomson Reuters, Bloomberg. The table above reflects market conditions as of May 22, 2018.
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