Quote:
Originally Posted by LouisVanDerWright
Bond inversion is not a dead ringer predictor for recession and this is likely a lot of chaos coming out of China as they are having a hell of a time controlling capital flight right now. People are dumping cash in the US right now and that, not economic data, is causing the bond rally.
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I keep seeing these lines repeated over and over. The point isn't that they happened to invert this week, the point is that the 2-year and 10-year yields have been converging steadily since 2017. That the yields were close enough to invert in the first place is the story.
Why are people willing to receive less premium to have their money locked up for 10 years instead of 2 years? That's the real question. I can only imagine that a fear of economic slowdown is the answer. GDP growth was 1.9% in the 2nd quarter and it's running about 2% for the 3rd quarter. I'm not sure I see this "great economy" everyone keeps talking about. A great economy doesn't require 4% deficit spending to achieve 3% growth (probably closer to 2% this year).
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