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.
2018-05-01 11:38:00 Tuesday ET
America and China play the game of chicken over trade and technology, whereas, most market observers and economic media commentators hope the Trump team to
2019-01-11 10:33:00 Friday ET
The Economist Intelligence Unit (EIU) continues to track major business risks in light of volatile stock markets, elections, and geopolitics. EIU monitors g
2019-03-17 14:35:00 Sunday ET
U.S. trade rep Robert Lighthizer proposes America to require regular touchpoints to ensure Sino-U.S. trade deal enforcement. America has to maintain the thr
2018-07-27 10:35:00 Friday ET
Admitting China to the World Trade Organization (WTO) and other international activities seems ineffective in imparting economic freedom and democracy to th
2019-04-15 08:37:00 Monday ET
Chinese Belt-and-Road funds large international infrastructure investment projects primarily in East Asia, Central Asia, North Africa, and Italy. Chinese Be
2019-04-30 07:15:00 Tuesday ET
Through our AYA fintech network platform, we share numerous insightful posts on personal finance, stock investment, and wealth management. Our AYA finte