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US Yield Curve Inverts for First Time Since 2007

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Itsallaguess
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US Yield Curve Inverts for First Time Since 2007

#244194

Postby Itsallaguess » August 14th, 2019, 11:27 am


The U.S. Treasury yield curve slipped into inversion for the first time in more than twelve years Wednesday, as investors extended a global rally in fixed income assets amid slowing economic growth and tepid inflation readings in the world's largest economies.

Benchmark 10-year Treasury note yields fell to 1.628% Wednesday, edging past yields on 2-year notes , which held at 1.634%, for the first time since June of 2007. Benchmark 30-year bond yields were also active, falling to an all-time low of 2.0813%. The moves followed the weakest industrial output data from China since 2002 and data from Germany showing that Europe's largest economy contracted by -0.1% over the three months ending in June.

In Germany,Bund yields, which are a proxy for risk-free interest rates in the Eurozone and a key metric for global investor sentiment, have traded with a negative yield for several weeks, with 10-year paper at an all-time low of -0.638% and 30-year bonds trading at -0.166%.


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Re: US Yield Curve Inverts for First Time Since 2007

#244202

Postby odysseus2000 » August 14th, 2019, 11:46 am

Will the Fed cut?

Will China/US tariff disagreements get sorted?

Either of these two things can cause markets to move strongly, but it is not clear to me which way.

e.g. if the Fed cuts, do market participants take this as evidence that a recession is coming and dump equities, or do they see it has a saviour and buy equities?

Another wild card is the protests in Hong Kong and how China reacts or does not react.

There is also the US railway argument which is not currently supporting a US recession thesis according to some who study this.

If it was easy many more folk would make a lot of money out of equities.

Regards,


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