FYI: Everyone seems to be talking about the U.S. yield curve “inversion” this week, which would ordinarily signal a recession and a looming bear market for stocks. It doesn’t this time.
One problem is that the yield curve didn’t really invert. At least, not according to the standard definition of an inversion.
Strategists often use the yield curve, or the difference between Treasury yields at various maturities, as a gauge of expectations for growth and Federal Reserve policy. There was a bit of a ruckus on Monday when three-year Treasury yields (now 2.833%) rose above five-year Treasury yields (2.821%) for the first time in years. Two-year yields (2.835%) have climbed above five-year yields as well.
But it’s the gaps between short-term and long-term Treasury yields that are seen as recession indicators, and those aren’t signaling doom just yet. Five-year securities don’t really qualify as long-term debt, after all.
Regards,
Ted
https://www.barrons.com/articles/the-yield-curve-recession-signal-isnt-flashing-red-yet-1543940996?refsec=income-investing
