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After reading the case study(attached doc), please answer the following questions (you also need to find Estrellas study from the NY Fed a link is

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After reading the case study(attached doc), please answer the following questions (you also need to find Estrellas study from the NY Fed a link is provided in the case study). Also, you can use other sources as long as you cite them. To find the current yield curve (as well as historical yield curves you can go to https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/Historic-Yield-Data-Visualization.aspx) (case study is attached)

  • Question1.)Estrella(NYFed)isquitecertainthattheyieldcurveisagoodpredictoroffutureeconomicactivity.Fromthecase,orthelinktohisFAQs,answerthefollowingquestions:
  • A.)How successful is the yield curve at predicting recessions?
  • B.)What matters most the level of the term spread, the change in the spread, or the level of short term interest rates?
  • C.)Discuss why a yield curve inversion should lead to a recession.

  • Question2.)DickBerner(MorganStanley)isabitmoreskepticalaboutthepredictivepoweroftheyieldcurve.DoeshejustnotunderstandEstrellasoverwhelmingevidences,ordoeshisskepticismrestonsolidreasoning?

  • Question 3.)How is the U.S. yield curve currently sloped? What does it affect your forecast of economic activity?
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