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The Yield Curve Is Not Forecasting A Recession

Published Sat, 01 Dec 2018 12:41:12 -0500 on Seeking Alpha

By now, most anyone who keeps up with financial matters knows that a flat or inverted Treasury yield curve is a good predictor of an impending recession. I've blogged extensively on this subject for almost 10 years. Recently, a few industrious pundits have found evidence that the front end of the Treasury curve is "close to flat." While it's hard to argue with their facts, an almost-flat curve is not the same as a flat or inverted curve. The latter occur only when the market looks into the future and sees good evidence that the Fed will no longer tighten policy and will very likely ease policy at some point. We're not there yet.
Here's a quick recap of where the yield curve stands:
Chart #1

Chart #1 shows us what the market has thought the target Fed funds rate will be in December of next year. One year ago, on the left end of the chart, the Fed funds futures market expected the funds rate to be 2.0% by December '19; it now expects the funds rate will be 2.7% by December of next year. That is essentially equivalent to two more Fed tightenings, from the current 2.25% to 2.75%. Currently, the market does not expect the Fed to do anything more beyond December '19. "Two more rate hikes and the Fed is done" is the current meme. That implies that the economy is quite likely to continue growing for the foreseeable future, but not at a very impressive (nor worrisome) pace. Note that expectations for the future target rate have... 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
ZWEIG FUND 9.32   0.0 0.00 1.44 15.73
LIBERTY ALL STAR EQUITY FUND 5.70   0.0 0.00 0.50 8.68
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

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
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
Peter Schiff Talks Yield Curves, Inflation And The Looming Recession

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