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Wednesday, October 18, 2017

Watch for Yield Curve Inversion

10/18/17 CNBC:
The bond market is warning that trouble could be on the horizon, either from an economic slowdown or an eventual recession.
The yield curve, a set of interest rates watched closely by bond market pros, has gotten to its flattest level since before the financial crisis. The spread between 2-year note yields and 10-year yields this week reached near the lows, at about 0.75, it has been since before the financial crisis.
"Yield curve inversion" is when long-term Treasury bond yields get lower than short-term bond yields.  I bought 30 year Treasurys in 1994 that paid me 7.5% annually from 1994 to 2016, when they matured, paying me a slight capital gain.  These can be good times to buy bonds for low-risk, often better than inflation returns.

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