US yield curve reveals long-term market doubts - AmpGFX

In view of Greg Gibbs, Analyst at Amplifying Global FX Capital Pty Ltd, the shape of the US yield curve does reveal underlying market doubts that the fiscal driven expansion will permanently lift potential growth. 

Key Quotes

“Perhaps perversely the US yield curve also does not see a significant uplift in US inflation (it should be one or the other). Long-term yields remain subdued below the current GDP growth rate, and even short-term rates are predicting little more than three further hikes this cycle and rates peaking in 2019, still below the recent pace of economic growth around 3%.”

“These doubts, essentially a stilted expected rise in either short-term, and perhaps more significantly, low longer-term yields, resulting in a relatively flat yield curve, are helping to prevent a clear acceleration in the USD strength that peaked so far in 2016.”