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Yield Curve

Sep 10 2021

Why Is Confidence “Inverted?”

  • Sep 10, 2021

Stimulus and soaring stock prices have contributed to the fastest consumer-confidence rebound of any economic recovery on record. Yet the manner in which this bounce has unfolded is anything but “early cycle.”

Dec 05 2020

Popular Trades — No “No-Brainers”

  • Dec 5, 2020

We studied several “popular trades” and there are good reasons to be on board with most of them, but none can be viewed as a no-brainer.

Oct 07 2020

Remember The Yield Curve?

  • Oct 7, 2020

It would be a mistake to ignore (as most pundits will) this important forecasting tool until the next time it threatens to invert. The level and direction of the yield curve provide helpful information throughout the entire economic cycle.

Jul 08 2020

No Yield Curve Control? The Fed Spoke Too Soon

  • Jul 8, 2020

There has been chatter about the Fed implementing the so-called Yield Curve Control (YCC). Although the latest FOMC minutes suggest that YCC is not on the agenda for now, we believe the chance of YCC is probably much higher than the market currently anticipates.

Mar 06 2020

Double-Digit Yield & Double-Dipping Curves

  • Mar 6, 2020

As the coronavirus materially increases the odds of a recession, some important parts of the U.S. yield curve (10Y-3M; 5Y-2Y) double-dipped into inversion. The two prior episodes occurred in late 1989 and mid-2006 and, in both cases, a recession followed within 18 months.

Mar 06 2020


  • Mar 6, 2020

We can’t count the number of times in the last week we’ve heard analysts worry about “what the Fed might know that we don’t.” In the words of John McEnroe, “You cannot be serious!”

Dec 06 2019

How Will It Be Remembered?

  • Dec 6, 2019

A way to gain perspective on the present is by trying to view it from the future. Ask yourself, “What are the signs of impending decline, now ignored by investors, that will one day be memorialized by the same investors as the most obvious in retrospect?”   

Nov 15 2019

Questioning The Monetary Rebound

  • Nov 15, 2019

This year’s upswing in money-supply growth has been one of many factors that’s prevented our economic work from triggering a recession warning. Following a two-year decline, year-over-year growth in M2 bottomed near 3% late in 2018 and has trended upward all year, reaching 6.7% in the latest week (Chart 1).


Oct 05 2019

More Yield Curve Musings

  • Oct 5, 2019

The U.S. yield curve inversion has lasted long enough that even a few economic optimists now concede it will ultimately prove significant.

Oct 05 2019

More Trends We Don’t Find Friendly…

  • Oct 5, 2019

The yield curve’s ten-month moving average inverted in September, hence the yield curve inversion can no longer be dismissed as transitory; the Boom/Bust Indicator remains below its descending 10-month moving average, confirming economic weakness predicted by the yield curve; and, the “Present Situation” component of September’s Consumer Confidence survey slipped below its 10-month moving average for the third time in 2019.

Sep 07 2019

Monetary Madness

  • Sep 7, 2019

We always do our own work and draw our own conclusions. Lately, though, we’ve wondered what the late “Monetary Marty” Zweig might say about the stock market’s current liquidity backdrop.

Jul 05 2019

Recession Evidence: How Much Is Enough?

  • Jul 5, 2019

Over a 12-month horizon, we now believe a U.S. recession is very likely, but aren’t confident enough to make the call when the forecast window is cut in half. Second-half stock returns could be decent if the business-cycle peak is still a year away. Then again, there’s peril in waiting for “too much” confirmation of recession.

Jun 07 2019

All That You Don’t Hear About The Curve

  • Jun 7, 2019

While the 10Y-3M curve inversion does warrant extra attention, movements in other parts of the curve also need to be taken into consideration.

Jun 07 2019

Bust To Boom, And Back Again

  • Jun 7, 2019

Last month, we observed that crude oil was the only item propping up broad-based commodity indexes, and that something was bound to give with the U.S. dollar pushing to new highs.

May 06 2019

Signs Of Spring For Financials

  • May 6, 2019

Signs of spring are popping up everywhere in the Financials sector. S&P Financials was easily the top- performing sector in April and several sub-industries have been bubbling higher in our Group Selection discipline.

Apr 05 2019

Inveighing Against The Inversion

  • Apr 5, 2019

Some recent headlines are word-for-word regurgitations of those published in response to the early-2006 yield curve inversion. In that case, the naysayers were temporarily correct, as both the U.S. economy and stock market pushed higher for another year and a half before rolling over.

Mar 07 2019

Watch What They Do, Not What They Say

  • Mar 7, 2019

While the celebration over Jerome Powell’s “Christmas Capitulation” lingered throughout February, we’re still awaiting signs the capitulation consisted of anything more than words.

Jan 08 2019

Yields Might Be Throwing A Curve

  • Jan 8, 2019

While the number of recession forecasts is on the rise, there’s a general reluctance among economists to project a downturn in the absence of a yield curve inversion.

Jan 08 2019

About That Great Jobs Report...

  • Jan 8, 2019

The December employment report temporarily eased fears of a severe U.S. slowdown. That’s a mystery to us.

Dec 07 2018

Deep-Six The “Threes-Fives”

  • Dec 7, 2018

We’ve sometimes called the yield curve our “favorite economist,” so we were amused when some enthusiastic data miner in the Treasury market tried to slip us a cheap imitation in late November.

Sep 08 2018

Beware The Policy “Narrative”

  • Sep 8, 2018

It’s been amusing to watch the narrative surrounding Fed policy evolve as the market has rallied.

Sep 07 2018

Yield Curve Proxy—A Tool For Equity Investors

  • Sep 7, 2018

The increasingly greater attention given to the yield curve by equity investors has prompted us to come up with an equity basket that can track the movement of the yield curve. Overall, it does a reasonably good job of capturing the major moves.

Aug 07 2018

Assessing The Correction

  • Aug 7, 2018

How do today’s cyclical conditions stack up with those accompanying other stock market declines? 

Jun 07 2018

What The Curve Does And Doesn’t Tell Us

  • Jun 7, 2018

The gap between the 10-year Treasury yield and the federal funds rate has narrowed sharply in the last year but remains a long way (~110 basis points) from inverting.

Jun 07 2018

All Crowded Trades Are Vulnerable—Even The Yield-Curve Flattener

  • Jun 7, 2018

Bond market volatility picked up quite a bit in May but the higher-low/higher-high pattern in the 10-year yield is still intact, indicating the primary uptrend has not reversed.

Mar 07 2018

U.S. Rates: Looking For A Dip

  • Mar 7, 2018

The U.S. 10-year ended the month 15 bps higher but non-U.S. bonds fared much better with bond yields in Europe and Japan 4-5 bps lower.

Dec 07 2017

Anatomy Of A Flattening Cycle—Flatter For Longer

  • Dec 7, 2017

The calm appearance of the 10-year yield masked a big curve-flattening move that has accelerated the last few months.

Oct 06 2017

Stocks And The Economy

  • Oct 6, 2017

The stock market is often maligned as a poor economic forecaster, and it’s true the market has predicted several more recessions than have actually occurred.

Jul 07 2017

Bond Conundrum—This Time Is Not That Different

  • Jul 7, 2017

Despite the late reversal in rates and the yield curve, the flattening trend of the yield curve remains intact. The fact that longer-term bond yields have fallen while the Fed is raising rates brings back memories of the “bond conundrum” episode during 2004-2006.

Apr 28 2017

Is The Yield Curve Overrated?

  • Apr 28, 2017

The U.S. yield curve has flattened in the last few months but remains a long way from inversion—an event that’s preceded each of the last eleven recessions.

Jul 08 2015

Navigating The First Rate Hike

  • Jul 8, 2015

Our current view is the lift-off will be December or later. Assuming inflation will pick up and the Fed hikes the rate by the end of 2015, stocks will perform relatively well, with international stocks a better bet than U.S. stocks.

Jun 05 2015

Steeper Yield Curve: All About Inflation

  • Jun 5, 2015

The steepening move in the yield curve is prevalent across many countries and is primarily driven by higher inflation expectations.

Aug 06 2014

Yield Curve Too Flat? Short Term Maybe, Longer Term Probably Not.

  • Aug 6, 2014

With the Fed policy approaching actual tightening, the market is trying to price in a rate hike in the next year or so. This is a rather typical market response.

Apr 07 2014

Twisty Curves

  • Apr 7, 2014

The short end of the yield curve sold-off to price in an earlier-than-expected rate hike, while the long end rallied as the prospect of tightening reduced longer-term inflation expectations.

Sep 10 2013

Duration: It’s Not Just For Bonds Anymore

  • Sep 10, 2013

We measure the sensitivity of common stocks to changes in interest rates using Implied Equity Duration. Growth-oriented sectors tend to have higher duration than Value-oriented sectors, while regional differences are largely explained by interest rate and risk premium differentials.

Jun 06 2013

Global Yield Curve Confirms “Muddle Through” View

  • Jun 6, 2013

The global yield curve is in a sideways range bound pattern, indicating anemic demand for credit. An examination of developed and emerging countries confirms our “muddle through” view.

Oct 05 2011

Risk Contagion Underway, But There Is A Silver Lining

  • Oct 5, 2011

A Risk Contagion is now underway, and we continue to stay defensive and favor higher quality assets within the fixed income space. A silver lining: When the Risk Aversion Index moves above 1, odds start to favor a decrease in risk aversion going forward. The bulk of the move is probably done.


Aug 04 2011

Market Interrelationships: “Unlearning” What We Thought We Knew

  • Aug 4, 2011

Doug Ramsey examines several once very reliable relationships between stocks, bonds, inflation, and commodities.

Sep 05 2007

Demise Of The Inverted Yield Curve...Greatly Exaggerated?

  • Sep 5, 2007

Recession risks don’t disappear the day the yield curve rights itself....the “window of vulnerability” extends for quite some time.


Aug 05 2007

Yield Curve Moved Positive In May, But We Are Not Out Of The Water

  • Aug 5, 2007

The yield curve has moved away from inverted status, leading many to conclude the possibility of recession has been avoided. However, a look at past recessions reveals that a reversal of an inversion typically occurs prior to the economic decline– ranging from 6 months to over a year in advance.