Anonymous ID: 591d3b May 28, 2019, 4:03 p.m. No.6611996   🗄️.is 🔗kun

https://www.cnbc.com/2019/05/28/morgan-stanley-says-economy-on-recession-watch-amid-bond-warning.html

 

http://archive.is/7zUFz

 

Panic?

 

>Morgan Stanley says economy is on ‘recession watch’ as bond market flashes warning

>When investors believe the economy is set for healthy growth, those that buy debt from the U.S. government for years are compensated with better interest rates than those who loan money for a matter of months. Under those normal circumstances, the plot of Treasury interest rates slopes upward, with investors earning more for holding debt for 10 years rather than a few months.

 

>That usual upward slope can change, however, when investors think economic output growth is likely to fall. That occurred earlier this year, when the yield on the benchmark 10-year Treasury yield first dropped below that of the 3-month Treasury bill, a sign many on Wall Street read as a recessionary signal.

 

>The curve flattened further Tuesday as the 3-month bill yielded 2.356% and the 10-year note yielded 2.269%.

 

>Some investors wrote it off, saying “it’s different this time” thanks to the Federal Reserve’s lingering quantitative easing or by how quickly the curve appeared to correct to a steeper shape. But Morgan Stanley’s deeper dive into the data — controlling for the Fed’s tinkering — reveals a “much different picture.”

 

>Morgan Stanley’s analysis shows the adjusted yield curve first inverted in November and has stayed in negative territory ever since.