Everyone these days is talking about yield curves inverting. It’s the topic du jour, similar to things like golden crosses and 200 day moving averages. The difference is that this one is more intermarket oriented. “Well if this happens to bonds and that happens to rates, then this historically happens to stocks, or the economy”. Observing the behavior of one asset class to help make decisions on another is called Intermarket Analysis, or “Cross-Asset” in some more institutional circles.
I don’t think there is much more for me to say at this point about the yield curve. The crew over at The Chart Report pretty much covered it all beautifully last week. The short end of the curve (10-year minus 3-month) turned negative, but the long end of the curve did not. The 10s-30s spread is steepening and controlled by free markets vs the fed controlled short end. We’ve seen this happen before, like in the 90s for example, without it sparking bear markets. [Read more…]