Yellen’s Talk of Hot U.S. Economy Extends October Long-Bond Rout and answer question below.
1. What is an inflation risk premium? What effect does the inflation risk premium have on the yield curve? Explain why undershooting unemployment rates and overshooting on price growth should argue for a steeper yield curve and higher inflation risk premiums, as was stated in "Yellen’s Talk of Hot U.S. Economy Extends October Long-Bond Rout" (Businessweek.com, October 15, 2016).