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