With four years of issuance to analyze, the 20-year bond has proven to be an expensive form of debt for the U.S. taxpayer.... Read More
The Bank of Japan enacted yield curve control in 2016. Since then, anytime yields on the Japanese 10-year pushed against the upper limit, the BoJ took action to widen the band. Earlier today the BoJ loosened the cap on rates for the fifth time, bringing into question the effectiveness of yield curve control.... Read More
10-year Japanese government bond yields continue to trade near their 0.50% yield curve control ceiling. Despite a 30-year high in inflation and rising wages, the Bank of Japan remains in a decades-long fight against deflation. With the BoJ's new leadership under Kazuo Ueda, a shift in policy is possible. ... Read More
The yield curve is eight for eight in predicting recessions over the last 50 years. It also correctly predicted the double-dip recession in the early 1980s.... Read More
An inverted curve has a simple meaning. It is a market message that the policy rate is too high.... Read More
An inverted curve has a simple meaning. It is a market message that the policy rate is too high. We have argued that, rather than predicting a recession, an inverted curve actually causes a recession. Every day the curve is inverted, the economy accumulates more damage. Eventually, this results in a recession.... Read More
The 3m/10y yield curve has been inverted since late May and now stands at -36 basis points. Unless the Fed gets aggressive and cuts 50 basis points at the September 18 FOMC meeting, the curve will likely remain inverted.... Read More
Large speculators are typically thought of as contrarian indicators. When they get too extreme one way, the markets will often move against them. Right now, they are betting on higher rates on the long end of the curve and lower rates at the short end of the curve.... Read More
Today will be the 10th consecutive trading day in which the 10-yr/3-mo curve has been inverted. Historically this has been an indication the the curve will stay inverted for a while. Inverted curves are a signal that FOMC policy is too tight. The cumulative damage of policy remaining too tight for longer periods of time can cause a recession.... Read More
There are many reasons to state, "this time is different" in regards to the yield curve's inversion. However, we believe the curves that includes a policy rate (3-month bills or fed funds) are sending a signal that the Fed is too tight.... Read More
The fed funds futures market is pricing in two cuts over the next year. The yield curve is inverted. These are signals the Fed is too tight. Will the Fed heed these warnings and cut rates or will they risk creating a recession?... Read More
The inverted yield curve has returned, reminding us that the Fed is too tight. Will the Fed listen and cut rates?... Read More
An inverted yield curve is a market signal that the Fed too tight. Will The Fed listen and cut rates?... Read More
Too many are looking at the yield curve inversion as a singular event that signals recession. More accurately, it is signaling Fed policy is too tight. The longer the Fed stays tight, as signaled by an inverted curve, the more damage it inflicts.... Read More
An inverted yield curve means the Fed is too tight. A Fed cut would help the curve steepen. The longer it takes the Fed to come to this realization, the more they damage the economy.... Read More
An inverted yield curve is a market signal that the Fed is too tight. This is about to happen.... Read More
The yield curve has imploded in recent days and is now telling the Fed to stop hiking, maybe even ease. Will the Fed hear this message?... Read More
The 2y10y spread is now at a new post-crisis low.... Read More
The narrative in the financial press is the yield curve is no longer a good predictor of recession. We believe an inversion in the 3-month-to-10-year yield curve is problematic for the economy and financial markets. An inversion means the Fed is at risk to "breaking" the economy.... Read More
The Fed has really been struggling with the meaning of the flattening yield curve. Some argue it means nothing, others argue it means a great deal. Powell took the middle ground and gave an incomplete answer, which is unusual for the plain-spoken chairman. The Fed wants to raise rates and the flattening yield curve has become an "inconvenient fact" to deal with.... Read More