CRAZY INVERTED YIELD CURVE! We should easily be reaping big Rewards & Gains, but the Fed is holding us back. And many of those have been instigated by President Trump, whose ongoing trade offensive against China is darkening the global outlook. For one thing, recent history suggests there’s frequently a lengthy interval — of a year or even two years — between a yield curve inversion and the next recession. SIGN UP NOW TRUMP TRACKER TRADE FLY-AROUND: President Trump meets with China's President Xi Jinping in June. (Kevin Lamarque/Reuters) — China signals retaliation for latest tariffs. As Todd Sohn, a technical analyst at Strategas, points out in an email: The yield curve inverted in December 1988, but a recession did not follow until July 1990, a year and a half later.
Specialist Mario Picone works on the floor of the New York Stock Exchange on Wednesday. (AP Photo/Richard Drew)
The first thing to know about Wednesday’s yield curve inversion is that it won’t itself cause a recession. The second thing to know is that it may signal one is close at hand.
For the first time since 2007, a two-year Treasury bond offered investors a higher return than a 10-year bond:
"In a healthy economy, bondholders typically demand to be paid more — or receive a higher 'yield' — on longer-term bonds than they do for short-term bonds," my colleague Jonnelle Marte explains. "That’s because longer term bonds require people to lock their money up for a greater period of time — and investors want to be compensated for that risk. In contrast, bonds that...
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