1. Yield Curve

Go tohttps://www.bloomberg.com/markets/rates-bonds/government-bonds/usand find the data for US Treasury yields for different maturities.Construct the yield curve and attach it to your post.

a. What is the shape of the yield curve? What is the market predicting about the movement of future short-term interest rates according to the observed shape?

b. Whay is the 2-year and 10-year yield spread? Read the investopedia article on the Inverted Yield Curve https://www.investopedia.com/terms/i/invertedyieldcurve.asp, why is 2-year to 10-year yield spread important according to the article?

c. What is your view about the current U.S. economic prospects based on your answer in part(b)? Please also find an online article that confirms your view.

2. Fed Watch

a. Read the latest Fed statement to evaluate prevailing economic condition: https://www.federalreserve.gov/newsevents/pressreleases/monetary20220727a.htm

b. How are the current economic activity, employment, and inflation situation?

c. In response to the current economic outlook, how will the Fed adjust the target range for the federal funds rate? How will the Fed adjust its holding of treasury securities and agency mortgage-backed securities?

d. How will U.S. interest rates be directly affected by the current Fed's monetary policy? Please construct a loanable fund diagram to show how the current monetary policy will shift the supply of loanable funds and thus the equilibrium interest rates. Attach the graph to your post.

e. Based on your assessment of future interest rate changes from part (d), how will the stock prices and bond prices be affected accordingly?

3. Week1 Reflection

Based upon what you learned in Week 1 study, share with your classmates something that you found to be an "ah-ha" learning moment and how it applies to your current or past experiences.