Stock investors should take note: The cause of the U.S. 3-month and 10-year yield inversion wasn't completely low inflation expectations.
Inverted Yield Curve
"With both German and Japanese 10-year bonds at negative yields, the U.S. has been the only game in town for investors seeking yield from a developed country with a stable currency," wrote Chief Investment Officer of Private Wealth at Glenmede, Jason Pride. "This incremental demand has helped keep the term premium low by historical standards, suggesting that the signal given by the curve may not be completely organic."
Basically, foreign demand for U.S. treasuries is causing the price of those to move up and yield to come down. Of course, weak confidence in the economy is part of the picture, but stock investors should note that this technical supply-and-demand dynamic is also causing the inverted yield curve, which makes it slightly less likely the U.S. is headed for a recession very soon.
When the 3 month and 10 year treasury yields inverted in late March, with the 3 month going above 3.45% and the 10 year going below, stocks fell, as it was clear market participants were expecting severely stunted economic growth and inflation. So, according to Pride, the inversion may not entirely reflect doom and gloom for the stock market.
"Effective privacy and data protection needs a globally harmonized framework. People around the world have called for comprehensive privacy regulation in line with the European Union's General Data Protection Regulation, and I agree. I believe it would be good for the Internet if more countries adopted regulations such as GDPR as a common framework."
With internet structures and rules varying from continent to continent, see why Zuckerberg's proposal may not be feasible in Kevin Curran's RealMoney piece here.
Still, the stock is up, as investors like the general idea that Facebook is willing to comply with regulators.
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