Bloomberg radio reporting T-bill inversion

[nitpicker]

2-year rate: 1.63%
10-year rate: 1.62%

((30-year rate: 2.06%, said to be a historic low))

[nitpicker]

1. CNBC confirming

https://www.cnbc.com/pre-markets/

[progree]

9. Link --

https://www.cnbc.com/2019/08/13/us-bonds-yield-curve-at-flattest-level-since-2007-amid-risk-off-sentiment.html

The yield on the benchmark 10-year Treasury note on Wednesday broke below the 2-year rate, an odd bond market phenomenon that has been a reliable, albeit early, indicator for economic recessions. The yield on U.S. 30-year bond fell to a new all-time low, dropping past its prior record notched in summer 2016.

The yield on the 30-year Treasury bond traded at 2.061%, below its former record low of 2.0889% hit in 2016 following Britain’s Brexit vote. Yields fall as bond prices rise.

More in the article about the track record of 2 year note - 10 year note, and of other measures of yield curve inversions

[still_one]

2. Not just the US either. Inverted yield curve in Europe also

[we can do it]

3. Can you explain why this is important?

Want to be informed🙂

[Quemado]

5. Reliable recession predictor

Yield curve inversions “predicted 7 out of 9 recessions during the post-war period. This is a track record any economist would be proud of,” wrote Sung Won Sohn, professor of economics at Loyola Marymount University and president of SS Economics. “If the inversion started today, the economy could be in a recession within a year.”

https://www.cnbc.com/2019/08/13/us-bonds-yield-curve-at-flattest-level-since-2007-amid-risk-off-sentiment.html

[3Hotdogs]

6. I believe the definition of a recession is, decline in growth of G.N.P. of 18 month. Depression, 36

months or longer.

If the decline begins now, would it affect the election?

[Quemado]

7. How an economic decline that begins now would affect the election would depend on a lot a factors.

I'm not an expert, but I believe a lot has to do with how severe the decline is, and how it is portrayed in the media. For example, if television media shows video of 1,000 people standing in line, early in the morning on a cold January day with snow on the ground to apply for 100 jobs, that would have impact.

Presidents usually take credit for good economic times, and most of the time they get blamed for bad economic times. If voters blame Trump for a downturn in the economy, that would affect the election.

Another factor is the stock market, the bond market, and quarterly retirement account statements. If there is a decline in the markets, and people open up their 401K statement, and see a decline in value, they think (and maybe correctly so) they are poorer, and therefore, start belt-tightening. When people start spending less money in the economy, that contributes to the misery. Misery can drive people to vote out certain politicians.

Another factor is housing values. If voters perceive that their houses are losing value, that would affect how they feel about the economy, and may decide to take out their frustration in the voting booth.

[BeyondGeography]

8. It is seen as a lack of confidence

Bonds follow the rules of supply and demand like any other product. When the risk/reward story for stocks deteriorates money migrates to bonds. The lower rate on extended maturities tells you more and more capital is looking for safety.

One reason inversions happen is because investors are selling stocks and shifting their money to bonds. They've lost confidence in the economy and believe the meager returns that bonds promise might be better than potential losses they could incur by holding stocks into a recession. So demand for bonds goes up and the yields they pay goes down.

This widespread loss of confidence explains why inverted yield curves have proceeded every recession since 1956. The last inversion began in December 2005 and heralded the Great Recession, which officially began in December 2007. Then came the 2008 financial crisis. There was also an inversion before the tech bubble burst in 2001.

https://www.google.com/amp/s/www.cnbc.com/amp/2019/08/14/the-inverted-yield-curve-explained-and-what-it-means-for-your-money.html

[mahatmakanejeeves]

10. Dow tumbles 400 points after bond market flashes a recession warning

Dow tumbles 400 points after bond market flashes a recession warning

David Goldman byline
By David Goldman, CNN Business

Updated 9:39 AM ET, Wed August 14, 2019

New York (CNN Business) -- The Dow slid more than 400 points Wednesday after the bond market, for the first time in over a decade, flashed a warning signal that has an eerily accurate track record for predicting recessions.

Here's what happened: The 10-year Treasury bond yield fell near 1.6% Wednesday morning, dropping just below the yield of the 2-year Treasury bond. It marked the first time since 2007 that 10-year bond yields fell below 2-year yields.

US stocks fell as investors sold stock in companies and moved it into bonds. The Dow (INDU) was about 1.5% lower. The broader S&P 500 (SPX) was down 1.4% and the Nasdaq (COMP) sank 1.6% Wednesday morning.
....

CNN Business' Fear and Greed Index signaled investors were fearful. The VIX (VIX) volatility index spiked 17%.

Investors are on edge because the German economy shrank in the second quarter, and the US-China trade war still looms large over markets, despite the latest truce. Industrial production in China grew at the weakest rate in 17 years.

As the global economy sputters, investors are plowing money into long-term US bonds. The 30-year Treasury yield fell to 2.05%, the lowest rate on record.

Government bonds — particularly US Treasuries — are classic "safe-haven" assets that investors like to hold in their portfolios when they're nervous about the economy. Stocks, by contrast, are riskier assets that tend to be more volatile during economic slowdowns.
....