Question
Corporate Finance Narrowing Yield Gap Signals Worries Over Fed, Growth Summary: The gap between yields on shorter- and longer-term Treasurys narrowed at months end, reflecting
Corporate Finance
Narrowing Yield Gap Signals Worries Over Fed, Growth
Summary: The gap between yields on shorter- and longer-term Treasurys narrowed at months end, reflecting the tension between investors expectations that interest rates will climb and their concerns about the prospects for longer-term growth. Yields on longer-term Treasurys, which tend to fall when investors expect cooling economic growth, have retreated since approaching their 2021 highs earlier in October. Yields on shorter-term Treasurys, meanwhile, have continued to rise. The yield on the two-year Treasury, which tends to climb when investors expect rates to rise, settled at new yearly highs throughout the past week.
Questions:
- According to the article, why have yields on longer-term Treasury bonds declined recently?
- According to the article, what factors have driven the increase in short-term Treasury bills recently?
- What do trading in CPI inflation swaps indicate about investors' inflation expectations?
- What do federal funds futures indicate about investors' expectations for interest rate increases in the coming year?
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