One Year Treasurys and One Year Forwards

Interest rates still expected to rise, but at slower pace:

Figure 1: One year Treasury (blue), one year forward one year (tan), both in %. Source: Treasury via FRED, and author’s calculations. 

The degree to which rates are expected to be one year hence, relative to current one year rates, has shrunk. In other words, less incremental tightening, than envisaged a couple of weeks ago.



13 thoughts on “One Year Treasurys and One Year Forwards

  1. macroduck

    The decline in interest rate expectations is coincident with a rise in recession expectations. No need to belabor the reasons.

    I would note, however, that the 10/2 term spread is quite small, while the 10y/3m spread is still wide – in other words, no sign of recession just now.

    1. Moses Herzog

      I like to think (in my little pretend X-Files like world), I’m pretty well versed in finance lingo. I just found out today that BTPs are Italian bonds tied to the Italian inflation rate. Was I the last one to know?? I’m asking this half-jokingly but I really just found this out today.

      1. macroduck

        Wrong guy to ask. I spent a career bathing in this stuff, so I don’t really know what the educated non-specialist-dude knows.

        1. Moses Herzog

          You did nothing to help my self-esteem here. What is the use in our interactions if you can’t at least sense when I am fishing for compliments??

          : )

          OK, you said “educated”. I’ll take that and run for the door before you change your mind.

      1. Noneconomist

        By that line of “reasoning” Boris Johnson and the UK Conservative Party are responsible for increasing prices here!

        1. CoRev

          Noneconomist, like policies give like results. The like policy? War on fossil fuels, and the list of countries with inflation and this policy is large.

          1. CoRev

            Barkley claims: “More like war on Ukraine than war on fossil fuels, (Then resorts to pettiness.). What part so hard to understand that Trump warned European leaders against relying upon Russian energy sources, as it gives Russia too much power?

            The desperation to blame the economy on anything other than Biden’s policies is apparent. These are the policies you folks have demanded for years. Why deny their impacts? How much damage will it take for you to admit your preferred policies suck? Or will it take the voters to tell you?

          2. Barkley Rosser


            You are jut completely all wet on inflation being due to “war on fossil fuels.” Even this stuff about Germany relying on Russia for natural gas is not nearly the big deal that some here make it out to be. What matters are global supply and demand, and the war has messed all that up quite irrespective of specific pipelines. Did crude oil prices go up because Russian gas was flowing to Germany rather than Germany getting it from US? No.

            This is as dumb all all your ranting about the keystone pipeline, which already exists, with the proposed one only slightly reducing the cost of transporting Alberta oil across the US some years from now, in short, no impact on oil prices at all.

            A major factor in the increase in inflation has been supply shortages of parts produced in Asia, such as computer chips, a major factor in the runup in auto prices, a major element of inflatino. But, no, for you it is all “war on fossil fuels.” Just one party hack dumb line after another.

  2. CoRev

    Barkley says something that is true: ” Did crude oil prices go up because Russian gas was flowing to Germany rather than Germany getting it from US? No.” Crude oil prices starting going up with Biden’s election. Prices went up due to his claims to end fossil fuels. In this case correlation is causation.
    BTW, gas is not crude oil.

    You also claimed: “… for you it is all “war on fossil fuels.” Just one party hack dumb line after another.” No, not all inflation is due to the “war on fossil fuels.” Nor have I ever said so. I have said a large portion is due to the “war on fossil fuels.” That war is nearly world-wide and a policy environmentalist have pushed nearly everywhere. Biden has certainly agreed with it. That ole war can also be tracked as a primary factor why many European countries embraced using Russian petro products, while they shut down their own coal and nuclear electricity generation facilities.

    Giving Russia the tools to economically destroy much of Europe’s economies was just the result of the all “war on fossil fuels.” and virtue signalling fighting climate change. Great planning in Europe and now by Biden.

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