Another view I’ve held for years is that they should raise their inflation metric to 2.25%-2.50% on PCE.
In any case, they haven’t. So, in reality, keep a close eye on 2’s — it’s itching to break out to an 80 handle. It appears they are headed toward their first-rate hike in years. If you wanted to ask a provocative question, ask people what do they believe they will achieve with rate hikes now. You will get some fascinating answers.
I am sticking to my model that 3% FED Funds and 3.7% on 10’s are recessionary rates with some duration after these levels. Those rate metrics would be the lowest rate curve to create a recession post-WWII. The best way to counter this call is to get more dollars into labor’s pockets.
Long Term Perspective On Federal Funds Rate, 10-year Yield, and Inflation
Logan Mohtashami is a senior loan officer at AMC Lending Group, which has been providing mortgage services for California residents since 1987.