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When Will There Be a Recession? #TimeToSell #ChrisBJohnsonRealtor #SellersPayZEROCommission #ListYourHome&PayNoCommission #BetterThanFSBO #5StarREALTOR®
An Inverted Treasury Yield Spread and Recession: A Short Story   by Mark Schniepp
March 2019
I mentioned this in the previous February newsletter but it’s worth exploring it further because “recession” has become a popular concern and this particular indicator has been relatively fail-safe as an antecedent for recession over the last several economic cycles. It should be noted however that most economic indicators are not signaling weakness in the economy yet.
What Does an Inverted Yield Spread Mean? An inverted yield curve is an interest rate environment in which long-term debt has lower yield than short-term debt of the same credit quality. It occurs when the 10 year U.S. treasury bond yield less the 3 month U.S. treasury bill yield turns negative. This is the conventional spread that is typically evaluated. Alternatively, other analysts use the yield spread between the 10 year and the 2 year T-bill.
An inverted yield curve predicts lower interest rates in the future. The belief that the economy is weakening moves investors to demand longer-term bond yields to lock in those rates. This sends the yields down. Since investors are not buying short term bills, their yields ultimately rise. And since the fed has raised the federal funds rate several times, short term rates ... more

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