The Shadow Knows! The Xu-Xia Fed Shadow Rate Is -1.7021% (US Effectively Has Negative Interest Rates And Inflation Is Expected To Continue And NOT Be Transitory)

Sharing is Caring!

by confoundedinterest17

The Shadow Knows!

Wu-Xia employs an approximation that makes a nonlinear term structure model extremely tractable for analysis of an economy operating near the zero lower bound for interest rates. It can be used to summarize the macroeconomic effects of unconventional monetary policy (ZIRP + QE). The Shadow Rate is now -1.7021%.

And you wonder why we have inflation and house prices going into orbit?

With inflation also going into orbit, we see that breakeven 10 year inflation rate rising above the 5Y5Y (nominal forward 5 years minus US inflation-linked bonds forward 5 years). In other words, the US has abnormally high inflation and is expected to grow and NOT be transitory.

See also  US Default? Since 2008, Net Interest Costs UP 192%, Social Security And Health Entitlements UP 140%, Nondefense Discretionary Spending UP 76% Based On 2032 Federal Budget

The Shadow knows … that the US is hyperstimulated. And inflation isn’t going away anytime soon.



See also  There is now a 4% chance the fed will raise rates 0.5 bps at the next meeting

Views: 21

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.