{"id":36160,"date":"2018-07-22T07:22:14","date_gmt":"2018-07-22T12:22:14","guid":{"rendered":"http:\/\/olduvai.ca\/?p=36160"},"modified":"2018-07-22T07:22:14","modified_gmt":"2018-07-22T12:22:14","slug":"fed-sweeps-yield-curve-under-the-rug-what-are-they-trying-to-hide","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=36160","title":{"rendered":"Fed Sweeps Yield Curve Under the Rug \u2013 What Are They Trying to Hide?"},"content":{"rendered":"
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\"Federal<\/p>\n

Fed Sweeps Yield Curve Under the Rug \u2013 What Are They Trying to Hide?<\/a><\/h3>\n

A few weeks ago we reported the Fed was getting hawkish<\/a> despite what they were calling \u201clow inflation.\u201d<\/p>\n

In that article, we showed rates possibly being raised more than 4 times<\/strong> in 2019. But more importantly, we warned that anyone investing in the market should start preparing to expect the unexpected.<\/p>\n

And right now, it looks like the Fed\u2019s bizarre moves are continuing.<\/p>\n

This time it involves the yield curve<\/a>. The yield curve represents the difference in interest rate paid on short-term Treasury notes and long-term Treasury notes in the bond market.<\/p>\n

A common signal of economic health from the bond market involves looking at the difference between the 2-year and 10-year rates (also called the \u201cspread\u201d).<\/p>\n

Over the last three decades, when 2-year yields are lower than the 10-year bond yields, it signaled a healthy economic outlook.<\/p>\n

But when that \u201cspread\u201d shrinks, the yield curve is said to be flattening. If it \u201creverses\u201d entirely, the yield curve is inverted (or negative).<\/p>\n

Since 1980, an inverted yield curve preceded an economic recession with reliable accuracy (see graph below<\/a>, red arrows point to 3 recent events):<\/p>\n

\"us<\/p>\n

So the yield curve is a fairly reliable signal for imminent recession. And notice the downward trend of the yield curve on the right side of the graph. That indicates a flattening yield curve heading towards inversion.<\/p>\n

And when we zoom in, the picture looks even more dire<\/strong>.<\/p>\n

As of July 11th, 2018 the Treasury reported<\/a> the difference between the 2-year and 10-year bonds to be 27 basis points<\/strong> (or .27% \u2013 see chart below).<\/p>\n

This is the lowest spread since the 2008 Great Recession, and already much lower than the historical graph above.<\/p>\n

\"us<\/p>\n

There is no doubt the yield curve is flattening, and at an alarming pace.<\/p>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Fed Sweeps Yield Curve Under the Rug \u2013 What Are They Trying to Hide? A few weeks ago we reported the Fed was getting hawkish despite what they were calling \u201clow inflation.\u201d In that article, we showed rates possibly being raised more than 4 times in 2019. But more importantly, we warned that anyone investing […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[18769,303,426,431,1138,3650,10388],"class_list":["post-36160","post","type-post","status-publish","format-standard","hentry","category-economics","tag-birch-gold-group","tag-fed","tag-inflation","tag-interest-rates","tag-stock-market","tag-us-federal-reserve","tag-yield-curve"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/36160","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=36160"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/36160\/revisions"}],"predecessor-version":[{"id":36161,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/36160\/revisions\/36161"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=36160"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=36160"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=36160"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}