Tuesday, December 27, 2005

The Inverted Yield Curve Today

Bloomberg reports on the whole subject of the inverting yield curve.The 2 year note:
yield hasn't exceeded the 10-year note's yield since Dec. 28, 2000, just before the start of the last recession. An inverted yield curve has foreshadowed each of the past four recessions.
Four examples isn't statistically significant but it gives you something to think about.Here's today's closing yield curve.Notice how the 6 month T-Bill yields one basis point more than the 10-Year note.Why go out ten years unless you really think interest rates are going lower for ten years?