5.20.19:
The bond market yields continue to fall. Other stats seem to support a weakening economy. The yield curve is getting more inverted. Time to worry a bit.
5.16.19:
According to the late Yogi Berra, that is. Stock market prediction is harder still. More success might be attainable from throwing darts than in predicting stock market moves.
However, one method seems somewhat reliable. That method is yield curve inversion. When the yield curve inverts, long term interest rates are lower than short term rates. The yield curve today shows a partly inverted yield curve.
On the near term end of the curve, the rate is at 2.40 percent. The 30-year yield is at 2.84 percent. It is flat, but not inverted. However, the curve does invert very slightly at the 1-year maturity and continues until the 7-year maturity.
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| yield curve |
This inversion is not likely to be significant. However, a completely inverted yield curve is useful for predicting recessions. Stock markets tend to follow recessions, so there you go.
The stock market may have its zigs and zags, but the bond market always bears watching.
No pun intended.
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