St Louis Fed paper finds cause of slope changes in rates term structures

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Single large shocks in total factor productivity (TFP) can explain the majority of all unpredictable movements in the slope of term structure of interest rates, according to a working paper, released on April 19, by the Federal Reserve Bank of St Louis.

"We provide a new explanation for the relationship between the slope of the term structure and macroeconomic fundamentals and for why the yield curve is one of the most reliable predictors of future economic growth," authors Andre Kurmann and

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