Bond Yields Crash On ISM Report, More China Tariffs: Inversions Strengthen

-edited

The long end of the yield curve continued its post-FOMC decline on poor manufacturing reports and new Trump tariffs.

Bond yields were already in steep decline today on ISM news. Trump goosed the market with additional tariffs on China.

Fed Gets Unwanted Reaction

The Fed cut interest rates yesterday in hopes of steepening the yield curve. I noted Fed Gets Opposite Response It Wanted: Inversions Strengthen

Inversions continued to strengthen today on Manufacturing reports: ISM and Markit PMI On Verge of Contraction.

Even before Trump's tariff announcement, I commented that "I Expect Contraction Next Month." Click on the link for my reasons.

A global manufacturing recession has already started. Trump's unwise move increases the odds of an economic recession soon, assuming it has not already started.

Mike "Mish" Shedlock

Comments (34)
No. 1-9
Mish
Mish

Editor

Traveling today to the North Rim of Grand Canyon. Reception poor.

ZZR600
ZZR600

So economic contraction begets DEFLATION, begets lower interest rates in an attempt to increase INFLATION, begets negative yielding bonds, begets DEFLATION, begets even LOWER interest rates, begets even MORE negative yields......where the hell does one invest in this scenario???

Tony Bennett
Tony Bennett

30yr bond yield down 9 bps (atm). Impressive.

Matt3
Matt3

The Fed seems to only be able to control the short end of the yield curve. If this is true, then the market is setting rates further out. Therefore to understand what is priced in the future, we can ignore the short (manipulated) portion of the curve. So what is the market telling us with low rates 5 -10 years out in the US and with negative rates in many European countries? Do inversions mean much now that we are in a new world of negative rates?

Carlos_
Carlos_

Well there you are Trump the stable genius who has run every business to the ground is about to do the same to the US MAGA! The other stable geniuses that kept telling the exerts of the time are: Hitler telling his generals how to fight a war Chavez telling economist how to run the economy

I know how this movie ends