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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 10.97   0.0 0.00 2.80 23.26
VANGUARD EXTENDED DURATION TREASURY ETF 121.58   0.0 0.00 0.00 2.70
SPDR DOW JONES INDUSTRIAL AVERAGE ETF TRUST 256.12   0.0 0.00 5.37 2.08
SPDR S&P 500 ETF 282.78   0.0 0.00 5.24 1.83
PROSHARES ULTRASHORT S&P 500 33.44   0.0 0.00 0.00 1.07
POWERSHARES QQQ TRUST SERIES 1 178.16   0.0 0.00 1.45 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):
Equity CEFs: Where's The Beef In The Delaware Dividend & Income Fund?
Of Slopes And Flops: The Yield Curve Inversion
When A Yield Curve Inversion Means Recession
Ignore The Yield Curve, They Said...
Is The U.S. Yield Curve Signaling A U.S. Recession?
Short And Sharp: Yield Curve Inversion - A False Positive?
Weekly Edge: Yield Curve Sends Mixed Signals
Why An Inverted Yield Curve Is Important
Blue, Red And Grey: Yield Curve Inversions
Market Update: Sovereign Debt And The Yield Curve

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