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Peter Schiff Talks Yield Curves, Inflation And The Looming Recession

Published Fri, 27 Jul 2018 05:28:22 -0400 on Seeking Alpha

By SchiffGold
Last month, we reported that the global yield curve inverted, signaling the possibility of a looming recession. While narrowing to levels not seen since right before the 2008 financial crisis, the yield curve has not inverted in the US. In his most recent podcast, Peter Schiff said he doesn't think it's going to happen. He said we may even see a steepening yield curve in the coming months. But this is not because there's not going to be a recession.

In general, investors demand a higher rate of return for locking their money up in long-term bonds, and yield curves normally slope upward. The rate of return on a 2-year bond will typically be less than the return on a 10-year bond. During economic expansions, inflation expectations tend to rise. As a result, investors demand even higher yields for long-term bonds to offset this effect. A sharply upward-sloping yield curve generally means investors have optimistic expectations for the future. But during recessions, inflation expectations tend to fall. That puts downward pressure on long-term yields. The difference between long-term and short-term yields flattens, and eventually inverts.
Yield curve inversions have signaled all nine recessions since 1955. But Peter doesn't think the curve will invert before the next downturn, because the dynamics in the economy are different. In fact, he thinks long-term interest rates will actually rise and the yield curve will steepen as we go into... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
CORNERSTONE TOTAL RETURN FUND 11.78   0.0 0.00 2.99 23.15
VANGUARD EXTENDED DURATION TREASURY ETF 109.16   0.0 0.00 0.00 2.99
SPDR DOW JONES INDUSTRIAL AVERAGE ETF TRUST 245.88   0.0 0.00 5.17 2.11
SPDR S&P 500 ETF 269.84   0.0 0.00 5.02 1.86
PROSHARES ULTRASHORT S&P 500 39.13   0.0 0.00 0.00 1.76
POWERSHARES QQQ TRUST SERIES 1 165.10   0.0 0.00 1.31 0.80
SPDR BARCLAYS CAPITAL 1-3 MONTH T-BILL ETF  

CORNERSTONE TOTAL RETURN FUND - CRF
CORNERSTONE TOTAL RETURN FUND - CRF  


Older articles featuring Cornerstone Total Return Fund (CRF):
The Inverting Treasury Yield Curve And The S&P 500
The Yield Curve Is Not Forecasting A Recession
Gundlach: U.S. High Yield Spread Heading Into Recession
More Yielding To Yields Next Week?
Dividends By The Numbers For September 2018 And 2018-Q3
Bond Yields Climbing: Could The Chinese Weaponize U.S. Debt?
Virtus Total Return Has A 13% Distribution Yield But Trades At A 6% Discount
Inverted U.S. Yield Curve? Recession? Not So Fast
New High For High Yield Debt
The Chemist's CEF Report - July 2018: Treasury Yield Spread Continues To Narrow

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