As is usually the case, the collective market instinct was right.
The 10-year yield dipped briefly below the fed funds rate Wednesday morning after a report showed a big drop in demand in April for cars, refrigerators and other big-ticket items known as durable goods. Notice the seeming broad adjustment in equity prices in domestic currencies to the strength of the dollar. The inversion early Wednesday was different than the inversion that occurred late last year and early this year, when the 10-year Treasury yield fell below the yield on shorter-term Treasury securities. Some of the pre-recession inversions in the past were far more pronounced. The international bull market in stocks last year was especially broad and deep in domestic currencies. The policy stance of governments in the various economies seems to be irrelevant. As is usually the case, the collective market instinct was right. Market observers said there could be some danger of an economic slowdown if the Federal Reserve decides to keep raising short-term interest rates aggressively.
Investors are forced out of the lending market by lack of profit there is no need to anticipate a recession. He added that inflation remains mild and the economy is growing at a surprisingly solid clip, despite concerns over high energy prices. Last winter, the Fed could keep raising rates without pushing the fed funds rate past the 10-year yield. People talk about interest rates going up and going down as if all rates moved together.
What happens next is unclear, to the markets and maybe to the Fed. This time, short-term interest rates have been climbing gradually while long-term rates have remained fairly flat, he noted, indicating financial conditions aren't as tight as they have been when rates were rising in the past. The simple fact lending falls off after a yeild curve inversion should make this obvious. This is notoriously unreliable but maybe somebody will clear things up afterward.
Make sure the Internet icon is selected amongst the Web content zones. More likely? It's signaling slower economic growth ahead. If this isn't recession, a lot of us are going to hurt bad when the real recession gets here. But I don't think there is good objective data on this. The whole situation is weird, and now I don't have any idea what will happen. Rumor has it that the long end traditionally rallies when the Fed finishes a cycle of rate hikes.