Bond Yield Curve Flattening ???

[corn18]

That looks ominous:

Guess I will have to not do anything.

 

[COcheesehead]

Here is the 10 - 2.

Yes, this comparison is what people usually use when talking about the curve, 10's vs 2's. Thanks for posting.

 

[copyright1997reloaded]

Here is the 10 - 2.

This chart (which I follow closely) points out something that we all should be aware of:

1) The curve (in this case 10-2) is a good predictor of future downturns.

But...
2) There are some occasions where the 10-2 goes negative, only to reverse. For example, it went negative early in 2006 only to go positive.
3) Most importantly, going negative does not mean the market has peaked. Typically the peak comes a year or so later.

This is one of the reasons why after the Feb selloff I predicted that we had not yet seen the highs for the year. So far, the Nasdaq and small caps have reached new highs, but not (yet) the SP 500.

All bull markets end badly...the only question is when. This one too will end badly, but the question is when and at what level when things truly turn down.

 

[audreyh1]

That looks ominous:

Guess I will have to not do anything.

It’s not flat yet.

 

[street]

Interesting graph thanks.

 

[Montecfo]

Another interesting issue on yield curve: companies have a tax incentive in the new tax law to fund pensions. Essentially, their tax benefit is at the old 35% rate to the extent of funding by Sept 15 as opposed to 21%, a meaningful benefit. This is creating policy-driven demand for long Treasury bonds (driving rates lower), which will abate after Sept 15 (resetting rates higher).

Getting pensions funded is a good thing. I think this also suggests another reason the yield curve may not invert (though the rate on the 30 may fall below the rate on the 10)

 

[audreyh1]

Another interesting issue on yield curve: companies have a tax incentive in the new tax law to fund pensions. Essentially, their tax benefit is at the old 35% rate to the extent of funding by Sept 15 as opposed to 21%, a meaningful benefit. This is creating policy-driven demand for long Treasury bonds (driving rates lower), which will abate after Sept 15 (resetting rates higher).

Getting pensions funded is a good thing. I think this also suggests another reason the yield curve may not invert (though the rate on the 30 may fall below the rate on the 10)

Yes - I’m really interested to see if demand for long bonds drop (and long rates rise) after Sept 15.

 

[copyright1997reloaded]

Yes - I’m really interested to see if demand for long bonds drop (and long rates rise) after Sept 15.

If so, short TLT?

 

[audreyh1]

If so, short TLT?

Of course not for me. I never short anything.

I just expressed curiosity.

 

[audreyh1]

The more I read about this, the more I believe that long rates are being pushed down by the global bond market.

 

[pb4uski]

Another interesting issue on yield curve: companies have a tax incentive in the new tax law to fund pensions. Essentially, their tax benefit is at the old 35% rate to the extent of funding by Sept 15 as opposed to 21%, a meaningful benefit. This is creating policy-driven demand for long Treasury bonds (driving rates lower), which will abate after Sept 15 (resetting rates higher).

Getting pensions funded is a good thing. I think this also suggests another reason the yield curve may not invert (though the rate on the 30 may fall below the rate on the 10)

Probably a molehill compared to a mountain.