The yield curve is steeper today, with the
T-bills and 10s no longer slightly inverted. The yield curve is in focus these
days, particularly because it recently inverted, an event that most times in the
past was a prelude to recession. Studies show that the best spread to watch
along the curve is the spread between 3-month T-bills and 10-year
T-notes.
It is the spread with the best predictive value with respect to both the
Economy and the financial markets. The spread inverted last week to as much as
-7 basis points, indicating recession odds of about 25% one year hence
(according to one Fed study). The latest steepening is likely related to both the
upbeat figures on the economy (durable goods, for example), and the upcoming
auction of 10- and 30-year Treasuries.
Tony Crescenzi Blog Business Spending Plowing Ahead 1/26/2006 9:38 AM EST Today's durable goods report will strengthen the argument that business will replace consumer spending.
Tony Crescenzi Blog Treasuries Weaken 1/26/2006 8:59 AM EST Traders are unwilling to bet on a rate cut just yet.
Tony Crescenzi Blog Watch Capex 1/26/2006 8:14 AM EST Business spending will play a key role throughout this year.
Tony Crescenzi is the chief bond market strategist at Miller Tabak + Co., LLC, and advises many of the nation's top institutional investors on issues related to the bond market, the economy and other macro-related issues. At the request of the Federal Reserve, Crescenzi is a regular participant in the board's Livingston Survey of economic forecasters. He is also the author of The Strategic Bond Investor. At the time of publication, Crescenzi or Miller Tabak had no positions in the securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Crescenzi also is the founder of Bondtalk.com, a popular Web site covering the bond market and the economy. Crescenzi appreciates your feedback; click here to send him an email.
TheStreet.com has a revenue-sharing relationship with Trader's Library under which it receives a portion of the revenue from purchases by customers directed there from TheStreet.com.
RSS FEEDS
PODCASTS
