Machine Learning

When yields move above 3 00%, it is my opinion that the Federal Reserve no longer fears deflation and is coming to believe that the recovery is gaining traction When this happens, the Federal Reserve responds by increasing the Fed Funds rate As a result, money markets and bonds sell off Here is the logic: when the economy is weak, the Fed Funds rate is kept low, which increases the demand for money When the economy is strong, the Fed Funds rate is raised, which reduces the demand for money As a result, when the Fed Funds rate is raised above 3%, money markets and bonds sell off because investors fear that the economy is gaining traction and that there will be an increased demand for money WHAT IS INFLATION? Inflation is a rise in the general level of prices for goods and services in an economy over a period of time This is often expressed as an increase in the Consumer Price Index (CPI) WHY IS INFLATION IMPORTANT? Inflation is important because it erodes the purchasing power of the dollar For exa