Ex-Fed President Dudley: Bond Market Doesn’t Reflect Budget Risks

The transcript discusses the Federal Reserve's awareness of economic cycles and the risks associated with prolonged expansions, such as corporate debt buildup. It highlights the challenges in US fiscal and monetary policy, including budget deficits and low interest rates. Concerns about corporate debt, especially in lower-rated credit, are addressed, noting potential vulnerabilities in future recessions. The impact of interest rates and inflation on the economy is also explored, with predictions of rising Treasury yields as inflation concerns grow.

What are the potential risks associated with the current duration of economic expansion?

What impact do interest rates have on debt service costs and the supply of bonds?

How does the buildup of corporate debt in the lower-rated credit spectrum pose a risk during a recession?

In what ways did the corporate income tax law changes enacted in 2017 affect the economy during downturns?

What are the implications of the Fed's actions on inflation and the bond market?