Tuesday, November 10, 2009
Hellacious at Sudden Debt has an interesting 29 October 2009 post on the yield curve's (YC) shape: http://suddendebt.blogspot.com/2009/10/boundary-conditions.html. While agreeing with his conclusion, i.e., the YC will flatten, we disagree as to why the YC is so highly sloped and what its slope means. I say the YC will flatten when Zimbabwe Ben's hand is twisted by the foreign exchange markets and he is forced to let short-term interest rates rise. Well done Hellacious!