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Rates Spark: Quiz Time
Essentially, the 10yr yield has been up and down in the past few years, briefly above 4.5% at times, and below 4% more often, but by and large has not shown a tendency to radically change its averaging at or about around 4.2%. And that, by the way, is at or about the neutral tendency that we identify for the 10yr Treasury yield. In other words, if the funds rate was close to neutral and inflation close to neutral, we should expect the 10yr yield to be around neutral too. Currently, we have a funds rate at 3.64%, just a tad tight versus neutrality. But the market is discounting a return to neutrality over the course ... (full story)