moh malekpour
Elite Member
- Joined
- May 25, 2002
- Professional Status
- Certified Residential Appraiser
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- California
Steven and Randolph,
I think both of you have a point regarding the relationship between the long term rate and the short term fed rate.
Conventional wisdom was and has been that the long rate always follows the short rate but the conventional wisdom has been screwed up by the global market participants.
Fed chairman, the Maestro, after 18 years on the job, got confused and surprised when he mentioned the historical word “conundrum” in describing the long term rate behavior after increasing the short term 12 times . The short rate was up 12 times and the long term was going down and it was a shock “conundrum” to Meastro because he expected the long term goes up as well.
Bernarke explained that “conundrum” differently when he was asked about the long rate behavior. He called it a global saving glut.
I think both of you have a point regarding the relationship between the long term rate and the short term fed rate.
Conventional wisdom was and has been that the long rate always follows the short rate but the conventional wisdom has been screwed up by the global market participants.
Fed chairman, the Maestro, after 18 years on the job, got confused and surprised when he mentioned the historical word “conundrum” in describing the long term rate behavior after increasing the short term 12 times . The short rate was up 12 times and the long term was going down and it was a shock “conundrum” to Meastro because he expected the long term goes up as well.
Bernarke explained that “conundrum” differently when he was asked about the long rate behavior. He called it a global saving glut.