Yields Expected over Next Three Months

The implied Treasury yield 2-3 months ahead, based on 3 month and 1 month yields has fallen in the past two days.

Figure 1: Implied Treasury yield 2-3 months ahead, % (blue, left scale), and VIX (right scale). Source: Treasury, CBOE, via FRED, and author’s calculations.

Note implied interest rates at the May FOMC meeting dropped going from 2/23 to 2/24.

Source: CME FedWatch Tool, accessed February 24, 2022.

The probability implied for 75-100 bps Fed funds rate went from 44.4% down to 34.8%, while the probability for 50-75 bps went up from 44.5% to 60.3%, despite the fact that near month WTI futures closed up at over $95/bbl. So for the moment the uncertainties of war are dominating a potential oil induced cost-push shock, as far as the market’s thinking about Fed direction.


65 thoughts on “Yields Expected over Next Three Months

  1. Moses Herzog

    I think I read a CNN headline that said the chance of a 50bps raise at the next meeting was low. Now maybe some will say CNN isn’t exactly Bloomberg, but I don’t know why they would run the story to get egg on their face. It was a dumb idea to raise rates 50bps in a single move and it really becomes questionable now. Again, raising rates, at least in a broad sense, is not going to help improve supply chain problems, It’s asinine.

    1. macroduck

      Menziecis looking at the May meeting. CNN is looking at March. Not too many days ago, 50 bps was built in for March. No longer.

      1. Baffling

        I did not believe 50 bp would occur in march prior to war. Less likely now. Ironically, i think war will only increase inflation pressures. The fed has a more difficult situation today than yesterday.

      2. Moses Herzog

        I’ll just say in a general sense here, when there are so many “moving parts” or different variables, and the reality is the Fed itself doesn’t really know if raising rates hurts or helps here, the intelligent move is to make incremental steps and then observe. 25bps moves is the only intelligent move. I think that in fact this is what the Fed will do (March or May if they indeed move in these months). Why do I think this is how the Fed will do it?? Not because it’s the most intelligent way when they don’t know the appropriate move. They will do the 25bps move/moves because officials like Powell are generally cowards. Which is why the turtle egg lowered rates to openly assist with the orange abomination’s nonsensical tariffs (literally if I recall inside of a 48 time frame). I’ll go back and look it up if anyone wants to argue the time span there. I can’t swear to that 48hrs, but it was a short damned time between the two decisions..

  2. Moses Herzog

    @ Menzie
    You don’t have to answer this in the thread, just something I noticed and hadn’t heard much talk about. And I wondered if this had entered your radar or if you had thought about it much. I just read about the “SolarWinds” attack Russia apparently made in late 2020 to early 2021. I don’t remember reading much about this, maybe I was preoccupied with Virus stuff or whatever. Do you know what % of these attacks had to do with the GSC/supply chain problems at that time or even to now?? I mean was that just a tiny part amongst many other supply chain problems or was it more that that??

    1. pgl

      I love the tweet about JD Vance changed his tune once this traitor realized how many of his constituents have Ukrainian roots.

      1. Moses Herzog

        I assume this will raise JD Vance even hire in David Brooks’ eyes as a “literary master”. Or “forgive this error” by JD Vance because “that would be elitist”. David Brooks, the epitome of the guy born on third base who thinks he hit a triple, telling us all how disgusted he is by “elitists”. He’s been spouting that BS since reading CliffsNotes on Newt Gingrich’s “How to Con Southern Illiterates”

        1. Moses Herzog

          *excuse me the above should read “higher in David Brooks’ eyes”. This is what happens when you always type looking straight down at your keyboard.

    2. baffling

      I am not against taking action with swift. however, from what I understand that action may end up being a bit more symbolic than many people want to admit. it appears there are easier workaround to the swift issue than some of the other economic sanctions being imposed, although it may take time.

      if this does not resolve itself soon, we will have much bigger problem on our hands. the longer this goes on, the more likely you get indiscriminate civilian casualties in the tens of thousands. at that point, western forces (hopefully global forces) will end up on the ground in Kiev. the threat of nuclear action is becoming more real. and there are some concerning reports about Putin’s behavior, which apparently is becoming a bit more erratic than in the past.

    3. Anonymous

      show them!! prevent that monster from killing innocents bc biden won’t back off surrounding russia….

      stop buying their oil! and germany stop using their gas. the us’ petroleum reserve in nearly bottomless and opec+ certainly will drill more in a politicized environment!

      i on the other hand prefer irish whiskey i am already boycotting stoli….

      there was a time in my long ‘experience’ where stoli was accessible to americans coming to a duty free in uk and eu!

      stocking my fridge with guinness for the celebrations of the great saint!

      ukraine dead is small price to pay to vindicate hill/vindman impeachment claims.

  3. rsm

    What if the Fed said “we’re going to fight inflation by giving everyone Cost of Living Adjustments via a CBDC”?

    Why doesn’t Biden give us gas stimmies?

        1. pgl

          Macroduck was too polite to say this so permit me. Your comment was STUPID. Then again that is par for the course for your comments.

  4. rsm

    What if the Fed said “we’re going to fight inflation by giving everyone Cost Of Living Adjustments via a CBDC”?

    Why doesn’t Biden give us gas stimmies?

  5. ltr


    February 25, 2022

    Chinese mainland reports 224 new COVID-19 cases

    The Chinese mainland recorded 224 confirmed COVID-19 cases on Thursday, with 82 linked to local transmissions and 142 from overseas, data from the National Health Commission showed on Friday.

    A total of 109 new asymptomatic cases were also recorded, and 816 asymptomatic patients remain under medical observation.

    Confirmed cases on the Chinese mainland now total 108,604 with the death toll remaining unchanged at 4,636 since January last year.

    Chinese mainland new locally transmitted cases


    Chinese mainland new imported cases


    Chinese mainland new asymptomatic cases


  6. pgl

    Which one of Bruce Hall’s puppet masters told this know nothing fool that Russia is #1 in gold production? No – China and Australia take gold and silver here with Russia only 3rd producing about as much as Canada and the US combined. But yea gold prices are up and this article notes some of the publicly traded companies benefiting from this increase:


    We know traitor Tucker Carlson wants to make money off of this war. And does not need the funds nearly as badly as impoverished Bruce Hall. So go for it – Brucie. You do not want to be the only traitor who profits from this war.

  7. macroduck

    A spokesman has said the Kremlin is willing to negotiate with Ukraine after Zelensky offered to give up the option of NATO membership. Russia’s foreign minister said Ukraine had missed the opportunity for such negotiations. That’s Putin talking outvof both sides of his mouth.

    1. macroduck

      At best Putin will mimic Iran, I suspect, demanding sanctions be lifted before reaching agreement. Likely, he’ll kill lots more people and grab land before ending hostilities.

    2. pgl

      Putin wants these peace talks to be in Belarus where he can just decide to arrest Zelenzky (if not kill him). Zelensky should only meet some place like Warsaw and only Putin stops demanding Zelensky surrender the ranch.

    1. Anonymous

      treason you say!!

      it has been an ‘interesting’ 30 hours.

      has the market priced a 0 ffr raise in march or a .25%???

      and all that oil coming out of the reserve, opec+ has again proven you cannot trust markets in the usa.

      biden is not popular among those (not me) who bet on $120 oil….

      how come no one is talking the release of crude reserves?

      that will be 2 shots of irish tonight!

  8. pgl

    Putin has already arrested 1700 of his citizens who dared protested his invasion of Ukraine. Keep protesting until the jails are overrun. The hope is that the Russian people can end this invasion by getting rid of their horrific dictator.

  9. pgl

    Chuck Todd is interviewing General David Petraeus on the possibility of insurgency in Ukraine against a Russian occupation. Now we know expert on all matters Princeton Steve has declared over and over that any such insurgency will go nowhere. The general is saying just the opposite. Who to believe? Who to believe? The general who had to deal with the insurgency in Iraq or the Village Idiot formerly from Princeton?

    1. baffling

      the Ukraine military is no match for the Russians. they are outgunned. but the Ukraine military is also modern enough to provide significant resistance. they could make life hell for a Russian occupation. here is the problem. Putin has no regard for Ukrainian life. I fear he will simply raze Kiev, until the Ukrainians submit. Ukraine can resist an occupation, but they cannot stop Putin from leveling the cities with catastrophic loss of life, if that is the path he chooses. then he walks away with the eastern half of Ukraine.
      I understand he is now threatening Finland.

      1. Moses Herzog

        This story is really quite “peculiar”. I recently read comments from a Russian “expert” who said that people in Kyiv would largely be bored with an invasion of their city. Is Reuters giving us “fake news”? Oh gosh, it’s all so “confusing”. And why did the U.S. embassy staff go west to Lviv?? So many “questions”. Are Kyiv citizens “cowardly” for getting on the train going west?? Yes, so many questions. The “expert” on Russia/Ukraine will tell us the answers soon.

        If we’re super lucky he’ll also explain to us the difference between Belarus and Moldova, north vs south directionally, and complex issues of the like.

        1. Barkley Rosser


          I have a feeling you are misremembering and misquotnig me again. I made a comment about Kharkiv, not Kyiv, that because so many of them are ethnic Russians they may be less bothered by Russian rule than people in the other major cities of Ukraine, even as I also said in the same comment that it was clear that they did not support a Russian invasion and that they supported the Ukrainian government. It is my view that Putin will find verhy strong resistance in Kyiv, where I have some close friends I am worried about.

          I would say that this is you again sticking yourself deeper into the moral vomitorium, except that it looks more like you getting forgetful and messing up again. Please do not tell us you are suffering from what you and someone whose fake name begins with an “E” like to accuse me of suffering from!

          1. Barkley Rosser

            BTW, it looks that at least the Ukrainian military in Kharkiv is so far putting up a strong resistance to the Russian invasion, as is happening elsewhere, even as at this point it is too soon to tell if or how long it will take for the Russian military to actually defeat the Ukrainian military, which I would like to see not happen.

            But even if they do defeat them, it is clear that in most of Ukraine, there will be enormous resistance to rule by the Russian invaders. One of the many delusions that the isolated Putin seems to be laboring under is that he can just run in and overthrow the Zelensky government and install some friendly locals to run the place and then withdraw his troops. Ukraine is not Belarus, where also the population opposes the ruler, Lukashenka. But the latter has been in power since the 90s and has the loyalty of the Belarusian security and military establishment, which put down with Russian help demos after the last election, which Luikashenka stole.

            But in Ukraine the military and security establishment does not favor Putin or Russia. He does not have a potential Lukashenka there to take over and run things with the help of an entrenchled local group (maybe in a few places in the east, especially in the DPR and LPR). The only way he will be able to enforce a pro-Russian ruler sitting in Kyiv is to keep large amounts of his military there, who will certainly be facing major opposition, much of it armed. Support for a lengthy and bloody stay of the Russian military there is very weak in Russia and will only get weaker as the body bags come home and the financial markets get worse (stock market droppped another 50% today after it finally opened).

          2. Moses Herzog

            Oh, look, another “boring” day in Kharkiv. The video link says it’s mortar fire, but I think Barkley Junior’s “friends” in Kharkiv would probably tell us, it’s just the bass sound from some hip-hop music the guy is playing in his car. Barkley’s Kharkiv “friends” say the car’s driver is ethnic Russian and he feels very bored about it.

            No doubt, if this guy had gone west to Lviv, Barkley could have told us all what a “coward” he is.

          3. Moses Herzog

            Oh look, another missile hits in a residential area of Kharkiv.

            I bet the ethnic Russians in Kharkiv “had some belly laughs” over that, aye?? You know I asked Russian “expert” Barkley about this, and he says it’s just another day for ethnic Russians in Kharkiv. Barkley’s “friends” in Kharkiv say it’s just kinda “boring” really. And who would argue that?? I mean really. It’s just like a kind of Activision Blizzard game or something, if the missile hits you, just blurt out “I am ethnic Russian” and then nothing happens and you drink some Mountain Dew. Is that cool or what?? Kharkiv people call it unstimulating. Missiles dropping from the sky are a tradition among Kharkiv’s ethnic Russians. it’s like taking a drag from a cigarette really. That’s what “friends” in Kharkiv say.

        2. Barkley Rosser

          BTW, Moses, while I am poking at nonsense out of you, I shall note that you went to great lengths, shouting in capped and emboldened letters about hoe Ekho Moskvy could not be “independent” because it is (partly) owned by Gazrpom, which is owned by the Russian government, although somehow you never quite got around to recognizing that it is only a partial ownership.

          Well, and this is from western public media, not my private sources, with my wife now home and stable from the ER, Ekho Moskvy has broadcast statements be several leading Russian public figures criticizing the invasion. So, while I reported here that it was not being as independent as it used to be, it still is retaining at least some independence, at least enough to publicize criticisms of the war, something not going on the fully state-run TV stations where outright lies are being reported, such as that Ukrainian soldiers are surrendering en masse, although maybe they have stopped pushing that ridiculous lie.

          So, Moses, are you going to retract you incorrect slam at me over the matter of Ekho Moskvy being independent? Or will you remain sitting deep in your moral vomitorium?

          1. Barkley Rosser

            While I am at it, Moses, and with you still apparently running around thumping your chest over things, let me note a difference between mistakes I have made and those you have made on this whole issue. Mine have involved overly optimistic forecasts of likely or possible outcomes, with me generally always warning things could be a lot worse. I certainly made such forecasts. I saw the ones coming from Biden and US intel, but hoped they were exaggerating to get an effect. But they were dead on. Putin was definitly fully planning this for a long time, despite all the noise to the contrary, although his making all that noise about not invading is reportedly damaging troop morale, where many of his soldiers believed that and are not really all that keen on this invasions.

            OTOH, your mistakes have been about facts on the ground, not possible futures. There have been too many to list them all, but some of them have involved you egregiously engaging in inappropriate shouting and chest pounding. An obvious one on that involves the matter of the independence and ownership of Ekno Moskvy as noted here already. Another was your bizarre claim about Russian troops being in “south east Romania,” although you have since tried to make a joke about that without admitting that you made a fol of yourself.

            But another big one I am not going to mention, one that really puts you in the moral vomitoriusm, was your blasting claim at one point that I and my wife were Putin mouthpieces. You did sort of back off that later, although without any apology. But you were nasty and self-righteious about that.

            Look, I am really tired of this intetrnecinse blastging betwwen us. Given all that is going on I would like to see it stop, although at the moment I am blasting back, since you seem to be unable to rtestrain yourself. At a minimum, if you are going to strut about blathering about my erroneous conditional forecasts, how about admitting your numerous plain out mistakes on actual facts?

          2. Moses Herzog

            Please please Junior, don’t poke too hard, I’ll be forced to remind people what Barkley Rosser Foreign Policy Dunce said, exactly 9 days ago:

            “Do keep in mind I am the one here with access to Russian media. That has now been blaring for several days that the troops will go home after the exercises are done, and exercises are exactly what they are doing now. This has more recently been reinforced by statements from Putin in press conferences, such as the one just held after the visit of German Chancellor Scholze.

            There is not going to be an invasion, even if some of the details of what Zelensky and Ukraine may agree to are not fully settled, and Victoria Nuland has been shooting her mouth off too much, somebody I wish was not part of this administration.”

            Don’t be too harsh on me, my record on Ukraine is so poor when measured against your recent statements. How did you know “There is not going to be an invasion” in Ukraine Barkley?? Your “friends” in Kharkiv being targeted with missiles right now “tipped you off”??

          3. Moses Herzog

            BTW Junior, do yourself a favor. One second you say I’m celebrating deaths in a war because I’ve caught you in 4-5 factual errors/LIES and dared to call you out, and in the next moment you’re saying I’m in a “moral vomitorium”. Which is it?? Am I celebrating deaths in a war or being overly moralistic?? When you insult someone Barkley, try to be consistent enough so that people can’t so easily see what a pile of crap it is from the very beginning ok?? Try that tact out.

          4. Barkley Rosser


            When are you going to get it that all this emboldening of words just makes you look like a total moron even when what you are emboldening supports the point you are making? This stuff makes you look like you are about 8 years old.

            I would note, btw, that there are reports that Putin was so convincing in his repeated assurances on Russian media that Russian troops would be withdrawn from Belarus once the exercises were finished, with these assurances being made up until as late a four days before these troops were used to invade Ukraine from the north, that these troops themselves believed what he was saying, and that this has contributed to a widely reported lack of morale that those Russian troops are experiencing since they invaded.

            Regarding people in Kharikiv, clearly they are resisting the invasion vigorously. However, it remains a fact that they are different in various ways from those in the other largest cities of Ukraine, including having a much higher percentage of native Russian speakers. Also, at the point in time when I reported from what was being shown live on TV, it was the case that people in Kharkiv were acting in a more relaxed way than were people in Kyiv. This was simply correct for whatever reason and is not disproven at all by more recent events. Going on and an about how they are resisting does not undo that fact and just makes you look like you are floundering around trying to play yet another gotcha game, but that one is about as successful as your srupid supposed gotcha about the ownership of Ekho Moskvy and its independent behavior, which continues despite its partial ownership by the Russian government, something you could not accurately report about.

            Sorry, but you are still in a moral vomitorium, walllowing in it actually.

        3. pgl

          I saw all those people waiting to get on a train which sort of shook me. It was like rush hour on the Uppidity East Side waiting for the 6 train before NYC finished the 2nd Avenue subway. And all we were doing was trying to get to work. These folks were fleeing for their lives.

    2. Moses Herzog

      I had asked before, when Menzie had astutely brought up the topic of possible future Ukraine insurgency in a post “Who is Ukraine’s General Petraeus, and or who is Ukraine’s General McChrystal??” (Petraeus would be the far superior of the two men) What would stop Biden from calling up and trying to persuade Petraeus or McChrystal or others with a mastery of insurgency tactics to be “informal advisers” to the Ukraine military?? It strikes me as a wise move. Yes, Ukraine’s military is poorly resourced and probably lacking in motivation or “morale” at this point. But don’t we have to try?? Why have we and Germany left them out to dry?? Some of this is donald trump’s doing, but now that he’s gone don’t we owe Ukraine’s people that much??

      1. pgl

        Remember how Princeton Steve tried to mansplain us why Menzie’s post on the number of troops it would take to put down an insurgency? Petraeus was interviewed today and what he said contradicted every piece of BS Stevie babbled.

    3. Anonymous

      ask petraeus the guy who wrote the ‘new’ counter insurgency field manual, and lost at his chance to prove it. i guess you all forget why he retired mid tour.

      we’ll see if the ukraine ‘underground’ fares as well as al nusra in syria.

      has any one here aside from barkley watched any of the recent series and movies out of russia depicting the great patriotic war?

      somewhat enjoyable….

      and mccrystal can do more push up than petraeus!

  10. pgl


    I wished I had watched this interview on Morning Joe as Hillary Clinton’s call out of the crazies that support Putin clearly went after Trump, Pompeo, Tucker Carlson and his Fox News buddies. But let’s be clear – she is also calling out traitors such as Bruce Hall.

    She also pleaded with the “smart” Republicans who might rediscover their spines to push the crazies including Trump and his minions out of the way.

  11. ltr


    February 25, 2022

    Fighting the last inflation war
    By Jeffrey Frankel

    In 1955, then-U.S. Federal Reserve Chair William McChesney Martin famously said that the Fed’s job was to take away the punch bowl “just when the party was really warming up,” rather than waiting until the revelers were drunk and raucous. Decades later, in the aftermath of the 1970s inflation, it became an article of faith among monetary policymakers that they should not wait until elevated inflation showed its face before reining in an overheating economy. Today, with inflation surging, they are developing a renewed appreciation for the punch-bowl metaphor.

    During the decade that followed the 2008 global financial crisis, adherence to this time-honored practice arguably led some central banks to pursue unnecessarily tight monetary policies. In retrospect, they sometimes overestimated the danger of inflation.

    In 2021, central bankers once again “fought the last war,” but this time by underestimating the danger of inflation as economic recovery began to run into capacity constraints. By the end of 2021, the U.S. unemployment rate had dipped below 4 percent, and inflation, at 7 percent, had hit a 40-year high. The Fed, having earlier taken the optimistic view that any inflation would be transitory, must now play catch-up.

    The experience of 2008-18 suggested that expansionary monetary policy could promote growth, and ultimately drive U.S. unemployment below 4 percent, with few adverse effects on price stability and interest rates. This conclusion required no fundamental rethink of macroeconomic theory. Rather, it followed naturally from the proposition that the economy at that time was operating on the low, flat part of the “LM curve,” and the low, flat part of the Phillips curve (which otherwise asserts a clear trade-off between unemployment and inflation).

    Consider key examples during that 10-year period when policymakers and commentators overestimated the danger that monetary easing would fuel inflation.

    The European Central Bank (ECB) actually raised its policy interest rate in July 2008. Although it soon corrected its mistake, it then raised rates again in April-July 2011. Sweden’s Riksbank did the same, raising interest rates in 2008 (through September) and, more egregiously, again in 2010-11.

    Even more obviously mistaken in 2010 was a famous letter to then-Fed Chair Ben Bernanke from a group of 24 economists, academics, and fund managers, opposing the monthly asset purchases, known as quantitative easing (QE), then underway, and warning that QE would not promote employment, but rather “risk currency debasement and inflation.” As should have been clear at a time when unemployment still exceeded 9 percent, there was in fact no reason to fear that monetary stimulus would lead to excessive inflation. The consensus among economists is that the Fed’s aggressive monetary easing in response to the 2007-09 recession was fully justified.

    Lastly, and more surprising to economists, was the 2016-18 period, when the U.S. GDP rose above its estimated potential and unemployment fell below 4 percent. In the past, this combination had signaled an overheating economy. So, it is understandable that the Fed raised interest rates from 2016 through the end of 2018. But, in the end, very little of the feared inflation materialized, suggesting in retrospect that the economy could have been allowed to “run hot” for longer. Apparently, the Phillips curve, if not dead, was supine.

    Now inflation is back on its feet. It turns out that when demand increases faster than supply, inflation results, just as the textbooks say. But the Fed, not wishing to repeat its mistake of 2018, underestimated the danger in 2021….

    Jeffrey Frankel is Professor of Capital Formation and Growth at Harvard University.

  12. Anonymous

    Rigs up 5, 3 gas, 2 oil. Really quite meager given prices and current rig counts. In other news, FERC came out with new policy of even more anti-pipeline and LNG approvals. No connection of low activity andcurrent administration, I’m sure, though.

    https://rigcount.bakerhughes.com/na-rig-count/ (click fourth link)



  13. Macroduck

    Putin has threatened war with Finland and Sweden if they continue their move toward NATO. A move which was motivated by Putin’s 2014 invasion of Ukraine.

    Putin is try to pre-empt NATO membership. NATO should pre-empt his pre-emption by stationing troops in Sweden and Finland while the process of joining NATO is underway. NATO exists to prevent Russia, in all its forms, from invading other nations. Russia has invaded other nations and is threatening to keep at it. After years of “is NATO relevant?” from people who needed something to say, we have our answer. Let’s not flub this moment.

    1. pgl

      Putin really wants to fight wars on both fronts? He is a mad man that could bring his own brutal regime to its knees. Let’s hope so.

  14. pgl

    Putin is cracking down on social media in his own nation. Why? His own citizens are protesting his evil invasion of Ukraine:


    I guess Putin thinks he can jail all the protestors. But maybe not. I wish the good citizens of Russia well and hope they toss this evil tyrant out of the Kremlin.

  15. pgl

    Back on 2/21 Dr. Chinn had to remind the always clueless Bruce Hall that natural gas prices in Europe or Asia do not always follow natural gas prices in the US. Here is an interesting chart of natural gas prices in the 3 regions:


    Notice the fact that while European prices have skyrocketed – the Henry Hub price is still very low. Now I get that Bruce’s hero (Trump) thought more US production was a great idea. But at these prices, US producers know better. Thankfully for their shareholders, their decision makers are not as incredibly stupid as Trump or Bruce Hall.

    Now one could ship LNG to Europe which is a really costly process. After all one must liquify the natural gas into LNG before shipping. But wait – Bruce Hall actually said LNG and natural gas are two different commodities somehow giving me credit for this incredible discover.

    One more time very slowly so Brucie dimwitted brain can keep up. We produce natural gas which cannot be shipped across the Atlantic Ocean. So we convert natural gas into LNG and then ship it.

    Now I only took two courses in college chemistry so I cannot pretend to be an expert but damn I knew THIS. I wonder if Bruce has finally passed preK tidley winks.

    1. Anonymous

      The issue with LNG is that it takes 5 years to build a plant. I routinely hear people (bulls, bears, liberals, conservatives) who are ignorant of this. Although really, it’s very well covered even in popular articles. So, it is not at all abnormal to have large blowouts of price. (+ or -) Anyone looking to build a plant needs to look at the long term economics, not the momentary spread from weather or geopolitics gyrations. Of course this is how many heavy capex commodity industries work.

      How many people talking about building more LNG (Tellurian equity bulls for instance) look at the 5 year+ HH vs TTF/JKM spreads? Well, that is what they need to look at. And it doesn’t matter if you build a plant on spec (some majors and Qatar) are capable of this or get customers, long term financing, etc. Anyone doing this is going to use very classical microeconomics and run an NPV model. They still might be wrong (shit happens). But they will look at the mean price expectations. Five years out and further. Whover plops the money down (a lender, major, or customer), they are all making a huge commitment.

  16. ltr

    A remark was made, most expressly about Mexico but generally, that the recession of 2007-2008 was a “China” recession. A look to the growth of Mexico from 1982 and beyond however shows that while trade with the United States continually and sharply increased, per capita growth was far faster in the US than Mexico. China of course had nothing to do with Mexican growth from 1982:


    August 4, 2014

    Real per capita Gross Domestic Product for Mexico as a percent of Real per capita Gross Domestic Product for United States & Exports of Goods and Services by Mexico as a percent of Gross Domestic Product, 1982-2020

    (Indexed to 1982)

    1. ltr


      August 4, 2014

      Real per capita Gross Domestic Product for Mexico as a percent of Real per capita Gross Domestic Product for United States & Exports of Goods and Services by Mexico as a percent of Gross Domestic Product, 1985-2020

      (Indexed to 1985)


      August 4, 2014

      Real per capita Gross Domestic Product for Mexico as a percent of Real per capita Gross Domestic Product for United States & Exports of Goods and Services by Mexico as a percent of Gross Domestic Product, 1992-2020

      (Indexed to 1992)

      [ The expression “China” recession for the downturn that began in 2007 is of course incorrect. Importantly, the expression is offensive. ]

    2. ltr

      Clarifying graph beginning date:


      August 4, 2014

      Real per capita Gross Domestic Product for Mexico as a percent of Real per capita Gross Domestic Product for United States & Exports of Goods and Services by Mexico as a percent of Gross Domestic Product, 1982-2020

      (Indexed to 1982)

  17. ltr

    Thinking of depressions, recessions and recovery, Simon Wren-Lewis has an important essay on the difficult recovery in the United Kingdom. This difficulty in recovery I would argue can be discussed in relation to the United States recovery and the recoveries of Korea, Thailand, Malaysia, Indonesia and possibly Vietnam in the wake of the Asian currency crisis recessions after 1995:


    February 21, 2022

    We are in an unprecedented era of UK relative macroeconomic decline

    Long time readers of this blog will be familiar with this chart, of UK real GDP per capita since just after WWII.


    It shows a remarkably constant trend rise of output/income per head of 2.25% per annum since 1955. The booms of the mid-70s and end-80s, and the recessions of the early 80s are only just visible, but thankfully the trend in GDP per capita always reasserted itself. Until, of course, the period after the Global Financial Crisis, when it didn’t in a quite spectacular way.

    Not only did we not bounce back in any way from that recession, but GDP per head started growing more slowly….

    — Simon Wren-Lewis

  18. Moses Herzog

    Very few people expected Zelensky to be this great of a leader. This is Zelensky’s moment. No matter what happens, this is Zelensky’s shining moment. People will remember this. One of God’s Chosen people. He’s showing it. He’s showing it. Please God keep him safe.

    1. Pgl

      The next post notes we all must make choice. Zelensky and his citizens have choose to fight. God bless them all

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