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On today\\u2019s show we are answering a simple but important question: Is the market ignoring the Fed?\\xa0
\\nWhat does the yield curve tell us about the recent 0.25% rate increase\\xa0 announced by the Federal Reserve on Wednesday.\\xa0
\\nThe shape of the yield curve can tell us a lot about the market sentiment in response to the Federal Funds rate.
\\nWe have been inverted for much of the past year.\\xa0
\\nThe yield curve has flattened a lot in the past two weeks as a result of the banking crisis. We have seen demand for short term T-Bills spike which has pushed prices up and yields down.
\\nOver the course of the day we have continued to see yields fall despite the rate increase announcement.\\xa0
\\nThe banks have a choice to put cash on deposit at the fed for a rate of 4.75%. Reverse repo is incredibly flexible and secure.\\xa0
\\nBut for some reason, they\\u2019re choosing not to put those funds on deposit at the Fed, which offers the highest interest rate in the market and is risk free).
\\nWe see all of the Treasury offerings, except the 6 month T-Bill pricing below the federal funds rate.\\xa0
\\nThe two year is down 36 basis points over the day at 3.882%. The 4 week T-bill is at 3.91%, down 28 basis points over the day. The 8 week is at 3.98, roughly flat for the day. The 10 year is yielding 3.462, roughly flat for the day
\\nThe 30 year is yielding 3.68, down six basis points from the day before.\\xa0
\\nAll of these rates except for the 6 month are below the Fed funds rate. I don\\u2019t believe there is anything magical about the 6 month T Blll other than market inefficiency at play. We will continue to monitor the 6 month to see if the trend we are seeing in the other maturities.\\xa0
\\nSo what does this all mean? Should we be happy and calm or terrified?\\xa0
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