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Weekly Edge: Yield Curve Sends Mixed Signals

Published Thu, 28 Mar 2019 05:20:41 -0400 on Seeking Alpha

By Ansh Chaudhary
If you've been anywhere near major news since Friday, you would have seen that the spread between the 3-month Treasury bill and 10-year Treasury note turned negative. Known as a reliable recession indicator, investors have frantically been reading about what to expect in the next 12-18 months - the typical amount of time it takes from the inversion of the yield curve to the beginning of a recession. The Cleveland Fed mentions that inversions of those two curves have preceded the last seven recessions, with only two false positives since 1966.
Consequently, analysts have been formulating opinions on how the inversion of the short-term and long-term yields could play out over the next few quarters. Marko Kolanovic, the global head of macro quantitative research at J.P. Morgan, doesn't think investors should be selling off their equities just yet. He looked at the market trajectory after the inversions that occurred between 1978 and 2006. Given the low 10-year Treasury yield and a pause in rate hikes from the Fed, Kolanovic hypothesized investors typically reallocate to equities. Because of this, the market outperforms subsequent to such an inversion.
Analysts at Seeking Alpha believe the inversion of the yield curve may be exaggerated at this point, and investors should also be looking at slowing growth in 2019 as the case for a recession. In the past, the yield curve inverted due to the Fed's hike on short-term rates, which is typically done to counter... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
CORNERSTONE TOTAL RETURN FUND 11.05   0.0 0.00 2.48 22.40
VANGUARD EXTENDED DURATION TREASURY ETF 142.38   0.0 0.00 0.00 2.21
SPDR DOW JONES INDUSTRIAL AVERAGE ETF TRUST 262.56   0.0 0.00 5.67 2.18
PROSHARES ULTRAPRO SHORT S&P 500 27.77   0.0 0.00 0.00 2.13
SPDR S&P 500 ETF 292.36   0.0 0.00 5.42 1.87
PROSHARES ULTRASHORT S&P 500 30.82   0.0 0.00 0.00 1.86
POWERSHARES QQQ TRUST SERIES 1 182.07   0.0 0.00 1.49 0.79
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):
Pay Attention To The Message The Yield Curve Is Sending
Negative-Yielding Debt: Monetary Contagion Spreads
The Dollar, High-Yield Bond Market And S&P 500 Revenue Growth
Two Yield Spreads Are Better Than One For Business Cycle Analysis
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?

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