Emanuel Mönch on the Post-Pandemic Term Premium

The term premium — investors’ compensation for holding longer-term Treasuries instead of T-bills — fluctuates with inflation uncertainty, federal deficit worries, and central banks’ balance sheets. The New York Fed’s Adrian, Crump, and Mönch model estimates the 10-year Treasury term premium is higher than before the pandemic but substantially lower than it was pre-GFC. The post-pandemic term premium will shape the path of longer-term Treasuries as bond investors consider what the new normal looks like. In this episode, we talk with Emanuel Mönch, Professor of Financial and Monetary Economics at the Frankfurt School of Finance and Management, about the models estimating the term premium, what’s driven changes over the last forty years, and how it could shift under a Warsh-led Fed.

Simply Put: Expert perspectives on the trends influencing fixed income, banking, and the macro landscape, hosted by FHN Financial’s Macro Strategist, Will Compernolle. Tune in to better understand what’s moving the markets and what to keep an eye on in the weeks and months ahead. Listen and subscribe wherever you get your podcasts.

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