2018-08-05 12:34:00 Sun ET
federal reserve monetary policy treasury dollar employment inflation interest rate exchange rate macrofinance recession systemic risk economic growth central bank fomc greenback forward guidance euro capital global financial cycle credit cycle yield curve
JPMorgan Chase CEO Jamie Dimon sees great potential for 10-year government bond yields to rise to 5% in contrast to the current 3% 10-year Treasury bond yield. This bullish perspective reduces the relative likelihood of U.S. yield curve inversion that indicates a negative term spread between short-term and long-term Treasury bond yields. A negative term spread or yield curve inversion typically indicates the early dawn of an economic recession. On the basis of recent empirical evidence, this technical macroeconomic prediction has been correct since the 1970s.
Indeed, Dimon points out that the current bull market can run for another 2-3 more years. Dimon's bullish sentiment relies heavily upon the sunny scenario where the Federal Reserve continues the current interest rate hike in response to inflationary concerns. Core CPI inflation and PCE inflation hover around 2%; unemployment declines below 4%; and real GDP economic growth lands in the healthy range of 3% to 3.5% per annum. In other words, the U.S. economy now operates near full employment and productivity growth with moderate inflation.
However, several economists consider the 5% Treasury bond yield benchmark a long shot due to subpar inflation expectations. In the alternative light, these experts suggest that the 5% Treasury bond yield benchmark may not be imminent until the Federal Reserve continues the interest rate hike until late-2019 or even early-2020.
In any case, Dimon's bullish perspective resonates well with the recent comments by Larry Kudlow, executive director of the National Economic Council. Specifically, Kudlow advocates the optimistic outlook for the U.S. economy in light of both full employment and 3.5%-4% real GDP economic growth in mid-2018. Kudlow even emphasizes that the current U.S. economic boom may continue until 2022-2024.
Overall, these fundamental factors contribute to upbeat investor sentiments toward the current economic boom in America.
If any of our AYA Analytica financial health memos (FHM), blog posts, ebooks, newsletters, and notifications etc, or any other form of online content curation, involves potential copyright concerns, please feel free to contact us at service@ayafintech.network so that we can remove relevant content in response to any such request within a reasonable time frame.
2017-04-07 15:34:00 Friday ET
Would you rather receive $1,000 each day for one month or a magic penny that doubles each day over the same month? At first glance, this counterintuitive
2017-11-17 09:42:00 Friday ET
The Trump administration garners congressional support from both Senate and the House of Representatives to pass the $1.5 trillion tax overhaul (Tax Cuts &a
2018-10-23 12:36:00 Tuesday ET
Former Fed Chair Paul Volcker releases his memoir, talks about American public governance, and worries about plutocracy in America. Volcker suggests that pu
2017-11-23 10:42:00 Thursday ET
As the TV host of Mad Money, Jim Cramer provides 5 key reasons against the purchase and use of cryptocurrencies such as Bitcoin. First, no one knows the ano
2019-08-07 12:33:00 Wednesday ET
Conor McGregor learns a major money lesson from LeBron James. This lesson suggests that James spends about $1.5 million on his own body each year. The $1.5
2018-07-09 09:39:00 Monday ET
The Federal Reserve raises the interest rate again in mid-2018 in response to 2% inflation and wage growth. The current neutral interest rate hike neither b