Credit Problem Developing in US… Gundlach: Yield Curve Inversion Means Economy Is About to Weaken

 

 

 

Gundlach: Yield Curve Inversion Means Economy Is About to Weaken

“As of Tuesday morning, the yield on the benchmark 2-year Treasury note hovered at 2.821 percent, above the yield on the 5-year note at 2.811 percent.”

DoubleLine CEO Jeffrey Gundlach believes that the recent inversion of the U.S. Treasury yield curve is a signal that the economy is set to weaken.

The so-called bond king told Reuters that the phenomenon is predicting that the “economy is poised to weaken.”

He also told Reuters the “totally flat” Treasury note curve will “stay the Fed’s hand” on future hikes in the federal funds rate.

On Monday, a portion of the so-called yield curve inverted, a phenomenon characterized by short-term rates that exceed long-term rates. As of Tuesday morning, the yield on the benchmark 2-year Treasury note hovered at 2.821 percent, above the yield on the 5-year note at 2.811 percent.

Dollar Falls as Yield Curve Inversion Feeds Recession Fears

“The dollar, which started the week on a weak footing as a thaw in trade tensions between Washington and Beijing sapped demand for the safe-haven greenback, extended its fall as investors fretted about an inversion of the short end of the U.S. yield curve in bond markets.”

 

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