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Dallas Fed’s Logan On Significantly Restrictive Level

FED
  • Logan (’23 voter) noted in her speech that “importantly, in recent months, real medium-term interest rates as measured by the yields on Treasury Inflation Protected Securities have averaged above 1.5 percent. That is a significantly restrictive level given that most estimates suggest the neutral real interest rate is below 1 percent.”
  • It’s hard to get 5Y real yields averaging above 1.5% unless you look over a long enough period back to late Sep but nevertheless, today’s 11bp increase to 1.57% on CPI (closer to 14bps just prior to the data) as it continues to push off lows of 1.2% pre-payrolls two weeks ago should help get back to that ‘significantly’ restrictive level.

5Y real yieldSource: Bloomberg

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