Yield Curve Collapse Signals 'Policy Error' Looms After Hawkish Fed Statement

Equity markets lurched lower but are coming back now after The Fed signaled a more hawkish expectation of two more rate-hikes in 2018. The dollar spiked and while Treasury yields also jumped, the yield curve collapsed to new cycle lows...

All major equity indices are red post-FOMC...

The dollar jumped to the day's highs..

 

Yield are up across the curve - 10Y stil below 3.00%...

 

And while rates are higher the yield curve is getting crushed with 2s30s at its flattest since Oct 2007...flashing "policy error" panic.

And at the shorter-end 5s7s  are back into single-digits and 7s10s is only +3bps (almost inverted).

Guggenheim's Scott Minerd tweeted:

"The current shape of the U.S. yield curve is consistent with a recession in early 2020"

5s30s is among the most sensitive spreads...

One more rate hike and this is inverted!

Comments

Quivering Lip Wed, 06/13/2018 - 14:39 Permalink

Happy days are here again. BTATH.

No worries Donald Tweeted so. Bestest economy ever. Companies pouring back in to USA.

Pouring money into buybacks (fixed it for him). 

Never been a better time to buy a $600,000 home.

Bwahahahahaha

 

khakuda Wed, 06/13/2018 - 15:32 Permalink

I don't see how you can worry about a flat or even inverted yield curve when central banks control both the short end and the long end through QE.  There is no market information as there are no free markets with global central banks price fixing out to 10 years.

KimAsa Wed, 06/13/2018 - 15:36 Permalink

They need to crash the eCONomy before 2018 mid-terms so the sheeple can blame all their economic woes on the Republicans and vote them out- that is the democratic way! Money talks and bullshit walks.

 

 De Senile says “fuck you” Trump, let it burn. That’s all you need to know about how they care about we basket of deplorables.