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Zorro

(15,691 posts)
Fri Mar 22, 2019, 01:44 PM Mar 2019

Treasury yield curve inverts for first time since 2007, underlining recession worries

A closely watched measure of the Treasury yield curve inverted Friday for the first time since 2007, highlighting fears that a global slowdown will take a toll on the U.S. economy.

The yield on the 10-year Treasury note TMUBMUSD10Y, -3.17% fell nearly 11 basis points to 2.428%, pushing it below the yield on the three-month T-bill at 2.453%. An inversion of that portion of the yield curve is seen as a reliable warning of a potential recession within a year or two. Inversions have preceded every U.S. recession going back to 1955 with only one false positive, researchers at the San Francisco Federal Reserve found. While inversions of other portions of the curve have also served as recession indicators, the researchers said the 3-month/10-year measure is the most reliable.

Bond yields around the world tumbled after a raft of disappointing purchasing-managers-index readings for the eurozone affirmed fears of lackluster growth in the 19-member group already contending with a trade slowdown and Brexit uncertainty. This comes after the Federal Reserve cut back on its interest-rate projections from two to none this week, with Fed Chairman Jerome Powell citing global economic headwinds for the cautious stance. Yields tend to retreat when growth prospects sour, and inflation fears have waned.

U.S. stocks, meanwhile, accelerated losses as the yield curve inverted.

https://www.marketwatch.com/story/10-year-german-bond-yield-flirts-with-zero-after-lackluster-eurozone-pmis-2019-03-22

This is not a good sign.

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Treasury yield curve inverts for first time since 2007, underlining recession worries (Original Post) Zorro Mar 2019 OP
it will be bad news. every sector of the economy is in danger. no place to hide. unblock Mar 2019 #1

unblock

(51,974 posts)
1. it will be bad news. every sector of the economy is in danger. no place to hide.
Fri Mar 22, 2019, 02:05 PM
Mar 2019

the key political question is when. typically it happens about a year after inversion, though it could take as long as two years and there's always room for a false positive.

donnie appears to have some limited control over the economy between a dovish fed and the presumed ability to stop his tariff nonsense at any point. both of these effects are limited, especially given that the fed does not have much room to cut rates, but it may be enough to delay things until after november 2020....

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