WSJ Economists' June Forecasts For 10-Year Yields And The Fed Funds Rate

This afternoon the Fed will release the FOMC Minutes for its May meeting followed by Chair Yellen's press conference. In advance of the Fed information, let's take a quick look at a couple of items in the June Wall Street Journal survey of economists, starting with where the Federal Reserve is headed with the Fed Funds Rate, which is currently holding steady at 13 percent.

The June survey was sent to 72 economists, with responses received from 66, although the individual respondents didn't necessarily reply to all questions. Here is a table showing the economists' expectations for the Fed Funds Rate — Low, Median (middle), Average (aka Mean) and High — at six-month intervals from June 2015 to December 2017.

Here is the equivalent table showing the forecasts for the 10-year Treasury Note yield, which closed yesterday at 2.32 percent.

Since a picture is worth a thousand words, here's a short visual essay illustrating the forecast averages for the two series, rounded to one decimal.

Economic indicators this year have been a mixed bag. The most popular headline employment numbers (new nonfarm jobs and the unemployment rate) have been encouraging. In contrast, Industrial Production and Retail Sales have been weak. Real Personal Income has been staggering a bit over the past three months.

Meanwhile, the economists in the latest WSJ survey have made little change over the past three months in their collective views on rates. Below are the same column charts for the May and April surveys.

What will the future bring? Recall the 1956 Academy Award winner for best song: Que Sera, Sera (Whatever Will Be, Will Be), immortalized by Doris Day. Will retail sales resume their long-term upward trend? Will the 10-year Note yield be approaching 5.8 percent by the end of next year (the highest forecasts in the first table above)? Only time will tell.