Fed Rate Projections Analysis June 15, 2022

This article is about analysis of market conditions from Fed's data.

2022/6/15

• The projected medium rate for 2022 is 3.4% which is 1.5% higher than the March projection. This is a big increase. One thing to keeping watch is whether the projection grows at the next meeting.
• The projected medium rate for 2022 is 3.4%, but the Fed funds rate now is just about 0.75%, which is 2.65%. 2022 is hafl way over. If inflation does not come down, we migh see bigger increase in rates in the coming meetings.
• 3-year bond yield is at 3.33%, 10 year is at 32.5% and the 30 year is at 3.35. The yield curve is realy flat, which is dangerous. We should continue to watch is yeild cuve is inverted.
• Projections for GDPs drop from the March meeting. 
• Umemployment rates increase from the March meeting.
• We should pay close attention to demands, because umemployemnt is set to increase. I expect demands will hurt during the course of combating inflation. It is just how much demand will drop so that recession is not triggered.
• Overall, it is still a good thing that Fed can raise rates to combat inflation, because US economy is resilient. 

Bond Downside Risks

The 10-year yield is at 3.25%, If rate rise instantly 2.65%, US 10-year treasury price will drop 20.06%.

The 30-year yield is at 3.35%, If rate rise instantly 2.65%, US 30-year treasury price will drop 37.67%.