Published Thu, 06 Dec 2018 11:11:41 -0500 on Seeking Alpha
Bond King Jeff Grundlach. Source: Barron's
On the surface the U.S. economy appears to be strong. The unemployment remains well below 5% (considered full employment). Average hourly wage growth for the month of October was over 3%, implying workers could switch jobs or demand higher wages from employers for staying put. However, the yield curve could be painting a much different picture. The spread between the 3-year and 5-year Treasury yields inverted earlier this week for the first time in over a decade:
For yield-curve watchers, the spread between 3- and 5-year Treasury yields inverted Monday, dropping to negative 0.6 basis points - its first time since 2007. To be sure, the 3/5 spread isn't the most widely watched measure. That's more likely to be the 2/10.
“The outright inversion could be reflective of the market pricing in some cuts starting in 2020, which may be helping the 5-year tenor outperform slightly,” said TD Securities rates strategist Gennadiy Goldberg.
Some suggested the inversion didn't necessarily foreshadow anything. After all, it is a minor part of the yield curve. The most watched is the spread between the 2-year and 10-year Treasuries. The 2-year yield is 2.83% and the 10-year is at 2.99% - a 15 basis point spread. It's also very flat, and dangerously close to becoming inverted.
Bond King Jeffrey Gundlach, CEO of Doubleline Capital, suggested the bond market signaled a weak economy:
Jeffrey Gundlach, chief... Read more
|Stock name||Last trade||P/E||Earnings/Share||Dividend/Share||Dividend yield|
|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 ULTRAPRO SHORT S&P 500||41.38||0.0||0.00||0.00||1.79|
|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|
|VANGUARD TOTAL BOND MARKET ETF|
Older articles featuring Thor Industries (THO):Dividend Sensei's Portfolio Update 63: Why I'm Now In Recession Prep Mode
Dividend Sensei's Portfolio Update 62: Why I Bought $15,000 Worth Of 7.2% Yielding Brookfield Property Partners
Dividend Sensei's Portfolio Update 61: 3 Reasons We Live In The Golden Age Of Investing
Dividend Sensei's Portfolio Update 59: How To Profit From Buffett's Most Important 'Secret To Success'
Nicholas Ward's Dividend Growth Portfolio: October Update
3 Upcoming Dividend Increases
9 Dividend Increases: October 8-12, 2018
Nicholas Ward's Dividend Growth Portfolio: Third Quarter Update
The Final 10 Of 50 Faster Growing Dividend Growth Stocks: Part 5
Upcoming Dividends: 79 Companies, 25 Increases, 13 Double-Digit Increases