Yield Curve in the News

My take on all of this yield curve is that when you see it flattening, be aware.  Foreign investors are not buying US treasury notes.  They fear that our economy, thanks to the latest tax cuts, are heating up too fast.  Unemployment can’t really get much lower, so inflation may come.  That may mean in the short term that the prime rate may have to go higher faster, even though in the long term it will likely be near where it is now.  So the US Government will have to offer better rates for short term loans it needs, and then the incentive to buy long term notes is just not there; thus the flattening. They suggest in the article that this means that a recession may be around the corner. Well that is more or less common sense, and I found this great link for you to see it.  It’s from earlier this year, but it’s quite good.  We are due for a recession, but who knows.  Timing the market is like gambling, and I don’t know enough to beat the house.

There has been a lot of talk about the yield curve recently, and this link is the best one that I have found that explains it all.  Admittedly, there is not a lot here that I understand that well, and well that is why I don’t have much to say about it.  I am learning, and I am comfortable in admitting that I don’t know all of this stuff.  So many of the bloggers I follow have pages that show how clearly they know and know for sure what they are talking about. Well, I am always going to be clear about the parts of this great subject that I am confident about, and the parts that I am not.  the point here is to get past that, and to start learning by investing time so that we can make better decisions.

 

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