The U.S. Treasury yield curve temporarily inverted on Wednesday for the first ti...
NEW YORK - The U.S. Treasury yield curve temporarily inverted on Wednesday for the first time since June 2007 in a sign of investor concern that the world’s biggest economy could be heading for recession.
Weak economic data and low inflation around the world, trade conflicts, and political tension in places such as Hong Kong have sparked worries about global growth, fueling market expectations of central bank interest rate cuts and triggering steep falls in government bond yields. The U.S. curve has inverted before every recession in the past 50 years, offering a false signal just once in that time.Some market players though are not convinced an inverted yield curve will necessarily lead to recession.
“This latest move on the long end of the U.S. curve is sending the Fed a clear message: the notion of a slow, methodical ‘mid-cycle adjustment’ is very much in question, and at the same time so is the efficacy of lower rates to solve the issues at hand,” said Gregory Faranello, head of U.S. rates at AmeriVet Securities in New York.
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