Royal Bank Of Canada with an interesting perspective on the recent inversion of short-term and long-term US bonds that have fallen below the Fed's interest rate. Reversing the curvy causes another sell-off on world markets due to the fear of an approaching recession. This is generally a predominant indicator of future economic shocks to one or two years.
But the bank thinks otherwise. In this case, the inversion does not point to a recession, but rather to a bubble. The yield on 10-year bonds reflects the appetite for global savings as well as the negative yield in many places.
This boosted economic growth, but at subdued interest rates, which led to rising inflation for certain assets. The RBC recommends that we abstain from the gloomy talk of recession, but look for a balloon.
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