When the Treasury yield curve is steep (long-term rates much higher than short-term rates), it suggests a strong economy going forward. When the Treasury yield curve is inverted (long-term rates lower than short-term rates), it suggests a recession ahead.
In late 2006 and early 2007, the yield curve became inverted. At the time, many pundits suggested that because of unique conditions, it may be a false positive. These pundits turned out to be very wrong. Now when pundits suggest that because of unique conditions, the currently steep yield curve may be a false positive, I am not inclined to believe them.
Don't argue with the yield curve.
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WC Fields was right.
ReplyDelete"There's a sucker born every minute"
The bond market are actually pointing out that the frickin dllar is about to collapse and we could hyper-inflate. There is no recovery in the next few years, there will be no recovery in the next few years and the markets do not indicate there will be a recovery in the next few years.You should be waiting fokr a currency event, cause that is what you are going to get.
ReplyDeleteI agree with anonymous, above. Read Arthur Laffer's article on the money supply in today's Wall Street Journal.
ReplyDeletehttp://online.wsj.com/article/SB124458888993599879.html
Now THERE's a graph to scare the stuffings out of any reasonably thoughtful person.
I think thats what james is alluding to. The pundits claim that this is all because of an upcoming currency implosion or failed treasury auction. James is saying, (I think) that while the punditry may be correct, the more likely explanation is that this is the beginning of the end of the recession.
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