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“At the end of last week, the three-month Treasury bills’ yield rose above the yield for 10-year Treasuries for the first time since 2007, prompting warnings that the U.S. is headed for recession later this year or in early 2020. That’s because, historically, such “curve inversions” have tended to precede major economic slowdowns by about a year. Yet, for reasons that relate both to the current determinants of the yield curve and the underlying state of the economy, the latest curve inversion could prove to be an exception to the rule — unless a misreading creates a detrimental self-fulfilling prophecy.
Yield-curve inversions are unusual because they involve lenders being willing to earn less interest income on money they commit, and therefore underpin both credit and liquidity risk, for longer. This typically happens when investors expect that yields on shorter-term maturities will fall substantially as the Federal Reserve cuts rates, also potentially dragging down longer-term bonds. This is most likely to occur if the economy is slowing sharply and faces a meaningful risk of recession.”
JJ Editor's Daily Picks
"Call it a victory for Hong Kong’s protesters. But the battle is far from over. Hours after reportedly having met with a senior Chinese official, a stern-faced Carrie Lam, Hong Kong’s Beijing-friendly chief executive, announced that her..."
"Should the U.S. Census Bureau know how many U.S. citizens are living in the country? Most people support the idea that it’s a reasonable question for the government to ask, which is why the census has asked it in one form or another since 1820..."
"The new capital that Egyptian President Abdel-Fattah al-Sissi is building near Cairo is already known as the white elephant that devours billions of dollars and doesn’t promise a return. It has received two elaborate housewarming ceremonies..."
"TWENTY YEARS AGO, George Lucas kicked off his reviled Star Wars prequel trilogy with Episode I – The Phantom Menace. Despite grossing over a billion dollars worldwide, the film received tepid reviews and continues to be a sore spot for Star Wars..."
"Whether the Tax Cuts and Jobs Act (TCJA) disproportionately helped the rich may be 2020’s biggest political issue. Treasury Secretary Steve Mnuchin claims that it benefited most Americans. Sen. Bernie Sanders (I-Vt.) calls it a massive giveaway..."
"There sits Mark Zuckerberg, staring into a camera, proclaiming that the secret to controlling the future is controlling the stolen data of billions. A shocking declaration for the head of one of the world's most important and powerful companies..."
"History, or at least the study of it, is in bad shape these days. Almost everyone agrees that knowing history is important, but in the United States, except at the most elite schools, the study of history is in freefall. Our age seems to share..."
"Summer reading—so much expectation and anxiety and judgment is compressed within those two words! June hardly has a chance to throw on a bikini and step onto the deck before morning shows, magazines, and Web sites descend with their “Beach Reads..."
"In the discourse of the upper-upper, don’t-call-us-rich middle class, an old stereotype of fatherhood — the dim, affable, useless-for-housework Pop — has lately been supplemented by a new one: The credit-hogging, pleased-with-himself Good Dad..."
"IN 1870, advertisements for beef extract began to appear in magazines of the day. Made by Armour & Company, a leading Chicago meatpacking firm, the extract was touted as a “remedy for disease and exhaustion.” In reality a byproduct of canned beef.."
"It all started with a goat. The unfortunate animal was born in the Netherlands in the spring of 1939 – and his prospects did not look good. On the left side of his body, a bare patch of fur marked the spot where his front leg should have been..."
"This past Erev Shavuot, my 18-year old daughter and I were walking together to the Tikkun L’eyl Shavuot at a nearby Modern Orthodox synagogue. For the past five years, my rabbinic colleague at that synagogue has invited me to co-lead a midnight..."