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Yield Curve Inverts, A Blip or is Recession on Horizon?

In what could be a signal of an economic downturn and rate-cutting, the yield curve for Treasuries inverted for the first time since the Great Recession. The gap between three-month yield and 10-year yield disappeared last week, with short-term debt paying more than long-term debt.

A surge of buying drove yield on the 10-year Treasury down to 2.43% from more than 3.20% late last year. The three-month yield was 0.03 percentage points higher than the 10-year yield. This flip is largely considered by economists as a reliable predictor of U.S. recessions, which they think could ensue in 12 to 18 months. The 10-year yield still remains above the two-year yield of 2.31%.

The rise in demand for the safety of government bonds followed the Fed’s decision to hold interest rates steady last week amidst lowered growth projections. Traders viewed those events as a sign that money policymakers expect a cycle of easing. A cut by the end of 2020 and a one-in-two chance of a reduction this year were priced into the bond market.

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About Dennis Kaiser

Dennis Kaiser is Vice President of Content and Public Relations for Connect Commercial Real Estate. Dennis is a communications leader with more than 30 years of experience including as a journalist and in corporate and agency marketing communications roles. He is responsible for Connect’s client content operations and is involved in a range of initiatives ranging from content strategy, message development, copywriting, media relations, social media and content marketing services. In his most recent corporate communications roles, he led a regional public relations effort across Southern California for CBRE, played a key marketing role on JLL’s national retail team, and was responsible for directing the global public relations effort at ValleyCrest, the nation’s largest commercial landscape services company. In addition to his vast commercial real estate experience, Dennis has worked on communications and launch strategies for a number of residential projects such as Disney’s Celebration in Florida, Ritter Ranch in Palmdale California (7,200 homes, 22,000 acres), WaterColor in Florida and PremierGarage in Phoenix. Dennis’s agency background included firms such as Idea Hall and Macy + Associates. He has earned an outstanding reputation with organization leaders as a trusted advisor, strategic program implementer, consensus builder and exceptional collaborator. Dennis has developed and managed national communications programs for Fortune 500 companies to start-ups, both public and private. He’s successfully worked with journalists across the globe representing clients involved in major-breaking news stories, product launches, media tours, and company news announcements. Dennis has been involved in a host of charitable and community organizations including the American Cancer Society, Easter Seals, BoyScouts, Chrysalis Foundation, Freedom For Life, HOLA, L.A.’s BEST, Reach Out and Read, Super Bowl Host Committee, and Thunderbirds Charities.

  • ◦Economy