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Current expectations for future interest rates




Here is Bloomberg's calculation of where the market expects Treasury yields to be in 1, 2, and 5 years (current yields are shown in the red line at the bottom, 5-year forward yields in the green line at the top). The market is expecting the Fed to raise the funds rate by about 1 percentage point over the next year, and another percentage point over the subsequent year. To me, this confirms what I pointed out in my previous post, namely that the market is not expecting great things from the economy over the next few years.

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