Flatter Yield Curve? December Rate Hike?

Two from Tim Duy. First:

The Unintended Consequences of a Flatter Yield Curve, by Tim Duy: It was supposed to be easy. When the Federal Reserve started hiking the federal funds rate, longer-term interest rates would rise. After all, they were at very low levels, restrained by a low-term premium. The “Greenspan conundrum” of the past two cycles, when long rates failed to respond in line with higher short rates, couldn’t happen a third time in such circumstances.

But it didn’t work out that way… …Continued at Bloomberg Prophets…

Second:

All Systems Go For A December Rate Hike, by Tim Duy: Incoming data indicate the US economy retains momentum as 2017 draws to a close, clearing the way for the Fed to hike rates in December. Inflation, however, remains on the soft side and continues to make some FOMC members nervous. That said, the consensus looks set to downplay those concerns amid an environment of solid economic growth and declining unemployment rates. I think it will be a challenge for FOMC members to shift gears to steady policy until growth moderates sufficiently to stabilize unemployment rates. …Continued here…