RE:RE:Feds concerned with cutting rates too soon:Jay....Yep
The other indicators that I look at are the 10 year rates and the delta between the 5..10...30 year rates.
The past few weeks the 10 year rate has actually climbed from 3.85 to 4.3. Typically, if the market was expecting a decline in rates, we would see more buying of the 10 year TBill which would drive the interest rate down. The opposite is going on. This suggests that big bond market players are not expecting a rate cut any time soon and if anything seem to be a bit fearful of a rate hike.
The longer term yield curve is essentially flat - 5 year at 4.31....10 year at 4.32...30 year at 4.48. This also confirms that the bond people aren't expecting a rate hike and more importantly that they are not confident that the Fed can get inflation down to a sustainable 2% target rate.
Sooooo....why is any of this important?
I have mentioned a long time ago in a post, when I was working on The Street, the people that I listened to the most carefully were the bond people since they, by necessity, get a much clearer and deeper insight into the books of companies and their prospects than any buy-side analyst. Right now, despite the chatter of all the talking heads on BNN and the American financial cable networks about how great things are, the bond guys are saying be careful.
The longer interest rates stay high, the greater the chance of a recession. The greater the chances of a recession, the greater the chance that oil prices will go down. Something to be keeping a close watch on IMO.