Fed Model

What Does Fed Model Mean?
A model thought to be used by the Federal Reserve that hypothesizes a relationship between long-term treasury notes and the market return of equities.

Investopedia explains Fed Model
The Fed doesn't endorse this tool. In fact, it was named the"Fed model" by Prudential Securities strategist Ed Yardeni.

This model believes that returns on 10-year treasury notes should be similar to the S&P 500 earnings yield. Differences in these returns identify an over-priced or under-priced securities market.

Related Terms

Alan Greenspan
Earnings Yield
Fed
Financial Modeling
Loose Credit
Standard & Poor's 500 Index - S&P 500
Sweet Spot
Tight Monetary Policy
Treasury Note
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