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Two Fed Narratives
There are two Fed narratives developing in the background, one that favors a flatter yield curve and another that favors a steeper curve. As of now, it appears that the flat curve scenario dominates the conventional wisdom while the steeper curve is the risk. I think it is worth reviewing the basics of the two scenarios so we can keep an eye on which unfolds in the coming months. The flat curve scenario is fairly straightforward and quite logical. I say logical because I have defended that scenario multiple times in the past, so it must be logical, right? Here, for example, where I discuss yield curve control and ... (full story)