May
10

Flattening Fears

 The flattening yield curve, or the declining differential between long-term and short-term rates, is giving many heartburn. Since 1970, every time it’s inverted (and short rates have exceeded long rates), a recession has followed. Are we near a recession? Very unlikely! The current flattening suggests nothing more than continued short-end Fed rate hiking, little inflation expectations, and slow long-run growth due to weak population and labor productivity increases. Chillax.

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