In recent weeks I’ve been building models that estimate a theoretical “fair value” for the world’s most important interest rate: the benchmark 10-year Treasury yield (see here and here). The goal: combine the results to develop a more robust estimate by using the average. As such, more models are better and so today I introduce a third approach to econometrically approximate the “correct” level of the 10-year rate.
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* 10yr-3mo Treasury yield curve continues to show downside trending bias: