Dividend-News

Daily dividend news for investors in dividend stocks


The Inverting Treasury Yield Curve And The S&P 500

Published Mon, 10 Dec 2018 07:46:13 -0500 on Seeking Alpha

There was one major economic event that occurred last week and it shifted the forward-looking focus of investors, sending stock prices sharply downward as a result.
That event was the partial inversion of the U.S. Treasury yield curve that took place on Tuesday, 4 December 2018. A yield curve inversion occurs whenever the yield, or interest rate, of a longer term bond or note issued by the U.S. Treasury Department falls below the level of a shorter term bond or note. This kind of event is often associated with an increased likelihood of an economic recession in the future, when businesses can expect to experience falling levels of earnings and cash flow, which is why stock prices would fall in the current day even though any economic distress is only in the potential outlook for the future and is not as yet guaranteed.
For a quick recent history of the Treasury yield curve, check out TheFirsh's two-minute long animated chart of the curve's history since 1990. Recessions followed within 1-2 years of significant yield curve inversions that occurred in 1989-90, 2000 and 2006-07 (the animation ends at the end of November 2018, so it doesn't capture the latest inversion).
On Tuesday, 4 December 2018, the yield of the 5-year Treasury dropped to lower than the yields of the 2-year and 3-year notes. Although the amount by which the 5-year note dropped below the 2- and 3-year notes is small, the negative implications of the event were amplified thanks to the highly... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
CORNERSTONE TOTAL RETURN FUND 12.03   0.0 0.00 2.60 21.94
VANGUARD EXTENDED DURATION TREASURY ETF 115.63   0.0 0.00 0.00 2.87
TOYOTA MOTOR 122.88   10.4 11.78 3.12 2.51
SPDR DOW JONES INDUSTRIAL AVERAGE ETF TRUST 265.92   0.0 0.00 5.42 2.05
SPDR S&P 500 ETF 292.23   0.0 0.00 5.24 1.80
PROSHARES ULTRASHORT S&P 500 31.23   0.0 0.00 0.00 1.16
POWERSHARES QQQ TRUST SERIES 1 189.71   0.0 0.00 1.45 0.77
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):
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
Yield Curve, Yield Curve, Yield Curve

More