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- Yield curve in inversion for the first time since 2007
Yield curve in inversion for the first time since 2007
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Loading...The cautiously observed yield curve for US government bonds for the first time became negative since the crisis ten years ago, further fueling worries about a possible economic slowdown and the Fed's ability to cut interest rates.
The gap between 3-month and 10-year bonds melted away, with short-term purchases of long-term shifts down. Turning curves is usually always a telling sign of a recession approach, with 10-year bonds falling to 2.439%.
On Wednesday, the Federal Reserve cut its expectations for economic growth as well as fiscal policy outlook. The majority of FED representatives believe that there will be no rise in interest rates this year. The traders assimilated the dovish reversal, taking positions to assess the new looping cycle by the Fed. Investors include, in their analyzes, the prospects of interest rate cuts by the end of 2020 with certainty, but they also allow a single pruning this year.
"It seems that the worries about the slowdown in the global economy have been confirmed and the market is beginning to appreciate the Fed's lighter fiscal policy as well as a potential recession." "says Kathy Jones, a strategist at Charles Schwab." This is an obvious sign that the markets are worried about growth, and investors move to bonds of risky assets. "
A fresh wave of purchases sent 10-year bonds to fresh bottoms for this year. Yield has fallen 17% since Tuesday. Poor data from Europe sent the German oligarchs back below zero.
Source: Bloomberg Finance L.P.
Graphs: Used with permission of Bloomberg Finance L.P.
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