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.
2017-03-21 09:37:00 Tuesday ET
Trump and Xi meet in the most important summit on earth this year. Trump has promised to retaliate against China's currency misalignment, steel trade
2026-05-02 10:28:00 Saturday ET
Stephen Covey recommends the 8th habit for effective team leaders to find their own voices (in addition to the 7 habits of highly effective people). In esse
2019-08-14 10:31:00 Wednesday ET
Netflix suffers its first major loss of U.S. subscribers due to the recent price hikes. The company adds only 2.7 million new subscribers in 2019Q2 in stark
2018-06-29 11:41:00 Friday ET
Amazon acquires an Internet pharmacy PillPack in order to better compete with Walgreens Boots Alliance, CVS Health, Rite Aid, and many other drug distributo
2019-03-09 12:43:00 Saturday ET
Pinterest files a $12 billion IPO due in mid-2019. This tech unicorn allows users to pin-and-browse images through its social media app and website. Pintere
2017-01-23 09:30:00 Monday ET
There are several highlights from the first news conference after Trump's presidential election victory: The Trump administration will repeal-and-