2019-04-09 11:29:00 Tue ET
federal reserve monetary policy treasury dollar employment inflation interest rate exchange rate macrofinance recession systemic risk economic growth central bank fomc greenback forward guidance euro capital global financial cycle credit cycle yield curve
The U.S. Treasury yield curve inverts for the first time since the Global Financial Crisis. The key term spread between the 10-year and 3-month U.S. Treasury yields dives below nil (i.e. the latter now exceeds the former by a positive increment). In response, Dow Jones tumbles 400 points as this brief yield curve inversion sparks recessionary concerns.
Treasury yield curve inversions have indeed preceded all of the 7 U.S. recessions since the 1970s. From a fundamental perspective, these key yield curve inversions reflect the pervasive fear that firms become reluctant to raise debt to fund positive net-present-value capital investment projects when households tend to fixate on near-term consumption with minimal leverage for longer-run investments in stocks, bonds, and real estate properties.
A flat or negative yield curve suggests that investors prefer to keep their money in short-term bonds as longer-term bonds exhibit greater reinvestment risk.
Whether the current yield curve inversion portends an economic recession in the next few years depends on the eventual resolution of economic policy uncertainty around Sino-American trade compromises, fiscal budget negotiations, and Federal Reserve interest rate adjustments from 2019 to 2020. This inversion may signal a stark sign of major economic events from a typically emphatic bellwether.
If any of our AYA Analytica financial health memos (FHM), blog posts, ebooks, newsletters, and notifications etc, or any other form of online content curation, involves potential copyright concerns, please feel free to contact us at service@ayafintech.network so that we can remove relevant content in response to any such request within a reasonable time frame.
2025-04-30 08:27:00 Wednesday ET

The multiple layers of the world cloud Internet help expand what can be made digitally viable from electric vehicles (EV) and virtual reality (VR) headsets
2023-08-07 12:29:00 Monday ET

Oxford macro professor Stephen Nickell and his co-authors delve into the trade-off between inflation and unemployment in the dual mandate of price stability
2020-11-22 11:30:00 Sunday ET

A brief biography of Andy Yeh Andy Yeh is responsible for ensuring maximum sustainable member growth within the Andy Yeh Alpha (AYA) fintech network pla
2023-02-14 09:31:00 Tuesday ET

Eric Posner and Glen Weyl propose radical reforms to resolve key market design problems for better democracy and globalization. Eric Posner and Glen Weyl
2019-02-07 07:25:00 Thursday ET

President Trump picks David Malpass to run the World Bank to curb international multilateralism. The Trump administration seems to prefer bilateral negotiat
2019-04-21 10:07:54 Sunday ET

Central bank independence remains important for core inflation containment in the current age of political populism. In accordance with the dual mandate of