Discover and read the best of Twitter Threads about #InvertedYieldCurve
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The #invertedyieldcurve is the latest brick built into the wall of worry which is great for this bull market. While it has foreshadowed every recession in post WWII experience, during the 50 years ended in the Roaring 20’s, the yield curve was inverted more than 60% of the time.
The average inversion during the 50 years ended 1929 was 100 basis points, with the steepest occurring during periods of very strong growth. Short rates averaged 4.9%, and long rates 3.9%.
We have been expecting this flat to inverted yield curve for some time, thanks to good deflation and strong unit growth associated with disruptive innovation. The last time the economy experienced this kind of deflationary boom was in the 50 years which ended in the Roaring 20’s
#US #InvertedYieldCurve & panic
On wed, #DowJones, #nasdaq & #SP500 saw more than 3% fall, highest in year so far
Reason? #10YearTreasuryYield < #2YearTreasuryYield, #spread being 0.04%, lowest since 2007
- Treasury notes are #USGovernment securities issued for 2, 3, 5 & 10 year
On wed, #DowJones, #nasdaq & #SP500 saw more than 3% fall, highest in year so far
Reason? #10YearTreasuryYield < #2YearTreasuryYield, #spread being 0.04%, lowest since 2007
- Treasury notes are #USGovernment securities issued for 2, 3, 5 & 10 year
Starting with basics first.
1. #InterestRate & #BondPrices have #InverseRelationship, meaning if interest rises bond prices fall & vice versa
1. #InterestRate & #BondPrices have #InverseRelationship, meaning if interest rises bond prices fall & vice versa
Why? eg. if currently #Coupon rate on a bond is 6% & int rate is also 6% & face value of bond is rs. 100. Meaning buyer of bond is willing to pay more or less complete face value of rs. 100
