Ben Eisen, WSJ, on the yield curve…

by Jim Colburn • Monday, December 18, 2017

Here Ben Eisen at the  Wall Street Journal on the flattening yield curve:

”Long-term yields tend to go up and down alongside expectations for growth and inflation, while short-term yields tend to rise when the Federal Reserve raises rates. A low long-term yield, especially at a time of rising short-term rates, is thought to be a sign of caution. And when long-term yields dip below their short-term counterparts in what’s known as an inverted yield curve, it has reliably indicated a coming recession.”

Here is Janet Yellen’s take:

””There is a strong correlation historically between yield curve inversions and recessions,” said Fed Chairwoman Janet Yellen at a press conference Wednesday. “But let me emphasize that correlation is not causation, and I think that there are good reasons to think that the relationship between the slope of the yield curve and the business cycle may have changed.””

 

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