Quote:
Originally Posted by lamboguy
the yield curve has been flattening, the 30 year is only 40 basis points more than the 10 year now. in the past that has signaled a recession is on the horizon. today i don't know what it means, because there is no such thing as conventional wisdom in the markets now.
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Hi Lambo.
The traditional yield curve has the 3 month, 6 month, 2 year, and 30 year as data points. The difference between the 10 year and the 30 is probably as important as the difference between the 3 month and 6 month. What you want to look at is when an actual short term rate exceeds the yield on an actual long term rate. You don’t want to compare one long term rate with one even longer term rate.
A flattening yield curve doesn’t always signal a recession. Half the time it signals you are coming out of a recession (when it’s flattening out from being inverted).
But thanks for sharing. Always enjoy your input.