The chart below depicts the US Treasury yield curve on December 2, 2022 versus the curve in November and June 2022. Please mark the only INCORRECT statement about the properties of a Yield Curve. US Treasury Yield Curve (YTM in %, as of 12/2/2022) 5% 4% 3% 2% 1% 0% 11/2/2022 12/2/2022 2Y 4Y 6Y SY 10Y 12Y 14Y 16Y 18Y 20Y 22Y 24Y 26Y 28Y 30Y Residual Maturity - United States. Dec 2022) ... 1M ago. 6M ago O a. The front end of the curve prices a steep cycle of increases in Fed Funds rate by the FOMC O b. The yield curve presents a deep inversion in the 10-yr versus the 2-yr sector. This usually means that the bond markets expects that the Fed's tightening cycle will lead to a recession, forcing it to cut rates in the future O c. The downward shift in the Yield Curve between November and December suggests that the market is now expecting that the FOMC will not raise Fed Funds rate by as much as it did in November O d. Compared to 6 months ago, the Yield Curve indicates that the bond market now expects that the Fed will not have to raise interest rates by as much as it anticipated in June because inflation Santa

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question

6

The chart below depicts the US Treasury yield curve on December 2, 2022 versus the curve in November and June 2022.Please mark the only INCORRECT statement about the properties of a Yield
Curve.
US Treasury Yield Curve (YTM in %, as of 12/2/2022)
5%
4%
3%
2%
1%
0%
2Y
11/2/2022
12/2/2022
4Y 6Y SY 10Y 12Y 14Y 16Y 18Y 20Y 22Y 24Y 26Y 28Y 30Y
Residual Maturity
- United States (5 Dec 2022) .... 1M ago
6M ago
O a. The front end of the curve prices a steep cycle of increases in Fed Funds rate by the FOMC
O b. The yield curve presents a deep inversion in the 10-yr versus the 2-yr sector. This usually means that the bond markets expects that the Fed's tightening cycle will lead to a recession, forcing it to
cut rates in the future
O c. The downward shift in the Yield Curve between November and December suggests that the market is now expecting that the FOMC will not raise Fed Funds rate by as much as it did in November
O d. Compared to 6 months ago, the Yield Curve indicates that the bond market now expects that the Fed will not have to raise interest rates by as much as it anticipated in June because inflation
declined slightly since September
Transcribed Image Text:The chart below depicts the US Treasury yield curve on December 2, 2022 versus the curve in November and June 2022.Please mark the only INCORRECT statement about the properties of a Yield Curve. US Treasury Yield Curve (YTM in %, as of 12/2/2022) 5% 4% 3% 2% 1% 0% 2Y 11/2/2022 12/2/2022 4Y 6Y SY 10Y 12Y 14Y 16Y 18Y 20Y 22Y 24Y 26Y 28Y 30Y Residual Maturity - United States (5 Dec 2022) .... 1M ago 6M ago O a. The front end of the curve prices a steep cycle of increases in Fed Funds rate by the FOMC O b. The yield curve presents a deep inversion in the 10-yr versus the 2-yr sector. This usually means that the bond markets expects that the Fed's tightening cycle will lead to a recession, forcing it to cut rates in the future O c. The downward shift in the Yield Curve between November and December suggests that the market is now expecting that the FOMC will not raise Fed Funds rate by as much as it did in November O d. Compared to 6 months ago, the Yield Curve indicates that the bond market now expects that the Fed will not have to raise interest rates by as much as it anticipated in June because inflation declined slightly since September
Expert Solution
steps

Step by step

Solved in 3 steps

Blurred answer
Knowledge Booster
Investments
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education