The sharp swoon in U.S. Treasury yields this month may not point to a looming economic slowdown after all.
Market participants have complained that the speed of the bond market’s rally this month appeared overdone given the resilience of the U.S. economy. Recent data including strong retail sales and continued growth in jobs underscore the strength of U.S. households that have weathered the worsening global economic growth trajectory.
Worries that the bond market was portending an economic downturn sparked the biggest one-day slump for the Dow Jones Industrial Average DJIA, -2.37% this year on Aug. 14.But Kolanovic says the value of long-term bond yields as an economic signal has been somewhat distorted by technical drivers such as so-called convexity hedging, a powerful driver of the bond market’s rally this year.
The FED is eventually going to have to cut rates and QE. They're holding off as long as they can. At 2% as the 'new' normal they've got even smaller margins than in 08.
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Dow ekes out gain as bond market flashes another recession warningPresident Trump says the economy is “doing really well,” even though a major indicator of recessions, the yield curve, inverted for the third time since last Wednesday. CNN’s Boris_Sanchez reports. Boris_Sanchez Indicators like those that said Hillary would win by a landslide? Those indicators, I.E.poles that were guaranteed to have Hillary as the winner. Those polls? Those indicators? You’re, um, trustworthy indeed… LOL Boris_Sanchez Trump just said he 'doesn't see a recession'. But Trump is wrong about pretty much everything. Boris_Sanchez The yield curve has been on a downward trend for close to 5 years. So were you lying about a good economy during the last president? Why the big deal now
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Here's what shows the bond market is really scared about Fed policyOne area that has been raising alarm bells is the market's growing expectation that inflation will go lower and lower, and stay there for a long time. More theatrical hypothetical scenarios rose Xi is losing control in China. The EU has a wealth tax on deposits. All the FED has to do is set the rate at 2% & meet again in December 2020. It has no control of the rest of the world. Strong dollar is needed to disengage with China Move the supply chain. tt:MariaBartiromo TRUMP, The Con-Artist & Bankruptcy King's Games are Ruining US!
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