The Entire Treasury Yield Curve Is ‘Inverted’


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The market is now requiring almost 4 rate-cuts this year – a stunning example of the desperation for financial policy mavens to save the world through easy money … and preserve the ‘buy the dip’ method that a generation of money managers has become conditioned to.

Source: Bloomberg

As former Dallas Fed’s Fisher noted the other day:

” Does The Fed really want to have a put every time the market gets anxious? … Coming off all-time highs, does it make sense for The Fed to bail the marketplaces out each and every single time … creating a trap?”

The Fed has actually developed this reliance and there’s an entire generation of money-managers who weren’t around in ’74, ’87, completion of the ’90 s, anbd even 2007-2009 and have actually just seen a one-way street … naturally they’re nervous.

” The concern is – do you want to feed that appetite? Keep using that opioid of inexpensive and abundant money?

the market is getting ahead of itself, because the market depends on Fed largesse … and we made it that method …

… but we need to think about, through a declaration instead of an action, that we must wean the market off its dependence on a Fed put

However the expectations have actually driven Treasury yields significantly lower …

Source: Bloomberg

With the whole curve now listed below the Fed Funds target rate …

Source: Bloomberg

And we know “it’s different this time” but every other time this has actually happened, an economic downturn was imminent …

Source: Bloomberg

” most likely nothing …”

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