Home › Forums › Financial Markets/Economics › Bond-rate curve and recession
- This topic has 20 replies, 4 voices, and was last updated 16 years, 10 months ago by
Chris Scoreboard Johnston.
-
AuthorPosts
-
February 21, 2008 at 1:43 PM #11882February 21, 2008 at 2:19 PM #157095
Eugene
ParticipantIIRC bond-rate curve becomes inverted before the recession. It’s the first sign that the recession is coming. Traders think that 1) stock market may be overvalued; 2) the recession is coming, therefore the Fed will have to lower the rates, so we should lock in high long-term rates; it’s better to invest your money for guaranteed 5% for 10 years ahead of time if you think that yields on 1-year bonds may come down to 2% for a while. Money flows from stocks and short-term bonds into long-term bonds.
This time the curve got inverted in mid-’06 and remained inverted till mid-’07.
February 21, 2008 at 2:19 PM #157475ParticipantIIRC bond-rate curve becomes inverted before the recession. It’s the first sign that the recession is coming. Traders think that 1) stock market may be overvalued; 2) the recession is coming, therefore the Fed will have to lower the rates, so we should lock in high long-term rates; it’s better to invest your money for guaranteed 5% for 10 years ahead of time if you think that yields on 1-year bonds may come down to 2% for a while. Money flows from stocks and short-term bonds into long-term bonds.
This time the curve got inverted in mid-’06 and remained inverted till mid-’07.
February 21, 2008 at 2:19 PM #157406ParticipantIIRC bond-rate curve becomes inverted before the recession. It’s the first sign that the recession is coming. Traders think that 1) stock market may be overvalued; 2) the recession is coming, therefore the Fed will have to lower the rates, so we should lock in high long-term rates; it’s better to invest your money for guaranteed 5% for 10 years ahead of time if you think that yields on 1-year bonds may come down to 2% for a while. Money flows from stocks and short-term bonds into long-term bonds.
This time the curve got inverted in mid-’06 and remained inverted till mid-’07.
February 21, 2008 at 2:19 PM #157399ParticipantIIRC bond-rate curve becomes inverted before the recession. It’s the first sign that the recession is coming. Traders think that 1) stock market may be overvalued; 2) the recession is coming, therefore the Fed will have to lower the rates, so we should lock in high long-term rates; it’s better to invest your money for guaranteed 5% for 10 years ahead of time if you think that yields on 1-year bonds may come down to 2% for a while. Money flows from stocks and short-term bonds into long-term bonds.
This time the curve got inverted in mid-’06 and remained inverted till mid-’07.
February 21, 2008 at 2:19 PM #157382ParticipantIIRC bond-rate curve becomes inverted before the recession. It’s the first sign that the recession is coming. Traders think that 1) stock market may be overvalued; 2) the recession is coming, therefore the Fed will have to lower the rates, so we should lock in high long-term rates; it’s better to invest your money for guaranteed 5% for 10 years ahead of time if you think that yields on 1-year bonds may come down to 2% for a while. Money flows from stocks and short-term bonds into long-term bonds.
This time the curve got inverted in mid-’06 and remained inverted till mid-’07.
February 21, 2008 at 2:52 PM #157407donaldduckmoore
ParticipantNow that we hear a lot of recession talks, but how come the curve is not inverted anymore?
Another question is that if more money coming from the stock market and short-term bond to long-term bond, then should the 10-yr or other longer term bond rate reduce?
February 21, 2008 at 2:52 PM #157423ParticipantNow that we hear a lot of recession talks, but how come the curve is not inverted anymore?
Another question is that if more money coming from the stock market and short-term bond to long-term bond, then should the 10-yr or other longer term bond rate reduce?
February 21, 2008 at 2:52 PM #157431ParticipantNow that we hear a lot of recession talks, but how come the curve is not inverted anymore?
Another question is that if more money coming from the stock market and short-term bond to long-term bond, then should the 10-yr or other longer term bond rate reduce?
February 21, 2008 at 2:52 PM #157119ParticipantNow that we hear a lot of recession talks, but how come the curve is not inverted anymore?
Another question is that if more money coming from the stock market and short-term bond to long-term bond, then should the 10-yr or other longer term bond rate reduce?
February 21, 2008 at 2:52 PM #157500ParticipantNow that we hear a lot of recession talks, but how come the curve is not inverted anymore?
Another question is that if more money coming from the stock market and short-term bond to long-term bond, then should the 10-yr or other longer term bond rate reduce?
February 21, 2008 at 9:31 PM #157385cr
Participantddm, I believe so, and I believe the curve is no longer inverted (temporarily at least) because the FED slashed rates 125pts in the last 30 days. Someone correct me if I’m wrong.
February 21, 2008 at 9:31 PM #157676Participantddm, I believe so, and I believe the curve is no longer inverted (temporarily at least) because the FED slashed rates 125pts in the last 30 days. Someone correct me if I’m wrong.
February 21, 2008 at 9:31 PM #157690Participantddm, I believe so, and I believe the curve is no longer inverted (temporarily at least) because the FED slashed rates 125pts in the last 30 days. Someone correct me if I’m wrong.
February 21, 2008 at 9:31 PM #157699Participantddm, I believe so, and I believe the curve is no longer inverted (temporarily at least) because the FED slashed rates 125pts in the last 30 days. Someone correct me if I’m wrong.
-
AuthorPosts
- You must be logged in to reply to this topic.