Nothing to fear but inversion fear

The concerns of this week continue to follow the established theme. There is a recession coming, or maybe not. A symptom or cause involves bonds.

On the bond side. Negative Yields Deepen in Europe says the Wall St Jo. In the US, according to BW, the gap between 2-and 10-year notes -- which bottomed out at 9.1 basis points in December and currently stands at about 14.3 basis points -- could resume its narrowing trend. You know that yields tend to fall as bond prices rise.

Inversion “is certainly a 2019 story,” said one wag. Inversion fear had a big hand in a late 2018 stock market tumble. But the market is rising.

Meanwhile, on the economy side, a slow down in Europe increasingly looks like threat to global growth. “Expansion is at risk of barely topping 1 percent this year, a sharp slowdown from 2018’s 1.9 percent.”


https://www.bloomberg.com/news/articles/2019-02-19/yield-curve-inversion-trade-seen-roaring-back-after-fomc-minutes
https://www.bloomberg.com/news/articles/2019-02-15/there-s-a-weak-link-in-the-global-economy
https://www.wsj.com/articles/negative-yields-mount-along-with-eur
opes-problems-11550491201