• The yield curve continues to flatten, even as economists deride bond market participants for misreading the Fed.


  • Oil bulls call for WTI above $60.


  • Why are economists cheering for higher rates, higher inflation and higher oil prices?


  • Another voice emerges for a flat UST curve with all rates below 3.0% (come to the dark side).


  • Cracks in high yield are becoming more noticeable.


2017 Mid-year Outlook:

Fed Funds:                                     1.25%-1.50%


2-year UST Note Yield:                   1.70%


10-year UST Note Yield:                 2.40%


CPI (2017 average):            2.0%


Core CPI (2017 Average):              2.0%


PCE (2017 Average):                      1.6%


Core PCE (2017 Average):            1.6%


GDP (2017 Average):                      2.2%


WTI Crude Oil:                                  $40-$55 (range)


2017 Outlook:

Fed Funds Rate:                              1.25% – 1.50% (year-end)


2-year UST Note Yield:                   2.00% (year-end)


10-year UST Note Yield:                 2.70% (year-end)


CPI (2017 average):            2.0%


Core CPI (2017 Average):              2.2%


PCE (2017 Average):                      1.8%


Core PCE (2017 Average):            2.0%


GDP (2017 Average):                      2.6%

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