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Old 09-21-2006, 06:12 PM
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Exclamation Treasury Yield Inversion

I haven't paid attention in awhile, surprised at the ongoing rate inversion:

http://www.bankrate.com/ust/ratehm.asp

What is causing this, when will it end, and what does the future hold?
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Old 09-22-2006, 10:00 AM
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I'd say the market is less convinced of the US economic strength then the fed reserve seems to be. Actually, the fed is more concerned about inflation - so maybe it means that both "too high" inflation and slow economic growth are in the cards. Anyway, it is a bad sign.

It will end when inflation appears to be under control enough that the fed lowers the overnight rates (probably not until 2007).
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Old 09-22-2006, 03:53 PM
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It also means that the market believes the Fed is doing a good job at containing inflation. With inflation at 4% and ten year treasuries at 5% the market looks like it expects inflation to go down in the future.
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Old 09-23-2006, 11:12 PM
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According to Samuelson & Nordhouse it's a classic indicator of the high point of a business cycle.
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Old 10-06-2006, 10:06 PM
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Over the past month, the inversion has held, but all Treasury yields have dropped about 15 bp. What gives?
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Old 10-06-2006, 10:51 PM
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Quote:
Originally Posted by JMO Fan View Post
Over the past month, the inversion has held, but all Treasury yields have dropped about 15 bp. What gives?
Bond traders think the economy is weakening - moreso than stock traders. The drop in yields says they think Fed rate cuts are coming within the next couple of quarters.
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Old 11-17-2006, 08:00 PM
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Arrow Yield Inversion Steepens

The yield inversion continues to steepen. Where is this headed? Is a Democrat-controlled Congress likely to have any effect?
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Old 11-17-2006, 11:17 PM
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The market is saying that the Democrats will slow the inflationary cycle by imposing fiscal discipline.
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Old 11-18-2006, 12:51 AM
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Quote:
Originally Posted by Colymbosathon ecplecticos View Post
The market is saying that the Democrats will slow the inflationary cycle by imposing fiscal discipline.
Robert Byrd is Chairman of the Senate Appropriations Committee - fiscal discipline will be a function of how much money the welfare state of WV can soak up. Hopefully Pres Bush will learn how to use the veto pen - otherwise we'll have another FBI lab of some sort in WV.
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Old 01-03-2007, 01:12 PM
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negative spread narrowing
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