• Optical analysis of forward pricing suggests the steeping of the USD OIS forward curve since the November 2020 vaccine breakthrough isn’t without precedent, despite the Fed’s explicit promises that inertia will be even higher and that it will be slower to tighten policy than before. Below we have charted the 1-month OIS 3-years forward. We choose the 3-year forward because three years is neither too far away nor too close to the present. Look closely and notice that the most recent increase roughly mirrors the 2013 taper tantrum. The increase in stronger than in 2016, when the Republican victory in the elections promised years of easy fiscal policy. Note that on purposes we didn’t measure the trough-to-peak increase to avoid exaggerating the move.

 

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