Share to linkedin... [+]The wise ol’ bond market is supposed to be the great sage of pending recessions. A flat yield curve? Ut-oh, the economy is faltering. An inverted yield curve? Wall Street is convinced economic contraction is merely a quarter or two away.
“I don’t believe there is a recession coming,” says Alex Ely, chief investment officer for U.S. small to mid-cap growth equity at Macquarie Investment Management. “Consumers are not extended. Unemployment levels are low and wage growth is high so we are optimistic,” he says, adding that 2020 looks fine.
Despite that low yield, the vast majority of investments in investment-grade debt is in U.S. Treasuries, keeping the dollar strong. more rate cuts to better compete with Europe, and in hopes they will sour demand for the strong dollar.“Two things stood out to me with their last decision. First, rather than stressing the downside risks to growth and inflation, their outlook is more balanced—so they’ve cut this time with a view of remaining on hold for the foreseeable future.
In the developed world, investors will only get paid over 2% annually if they buy bonds with a minimum maturity of 20 years. Germany’s 10 year takes your money and keeps taking it, with negative 0.35% yield.... [+]Michael Probst / ASSOCIATED PRESS