Inversion Inevitability

While the inverted yield curve isn’t good, it’s not as bad an omen as before. First, post-recession regulations have forced banks to hold more bonds. Second, the Fed now holds trillions in Treasuries. Third, rates in Europe are largely negative and fourth, the compensation investors demand for lending long is negative. All these factors act in one way or another to push down long rates, making inversions far more likely.    

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