The head of the world’s largest bond fund says investors shouldn’t read too much into the recessionary signal coming from the U.S. Treasury market
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Besides growth concerns, the investment manager instead sees other factors that have contributed to the phenomenon of long-term yields falling below their short-term counterparts.
“Given where our unemployment rate is currently, [a recession], holding all else equal, shouldn’t be much of a concern,” he said. The decline in yields, reflecting higher debt prices, can indicate bond investors anticipate lackluster growth, in turn, and subdued concerns about inflationary pressures that would erode fixed-income gains.Read: This time, an inverted yield curve suggests the stock market has already peaked, some analysts say
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