Almost a month later, it's here we go again. The theory behind the line in the sand calls is that once the 3% barrier is breached, treasury yields would quickly soar. They didn't.
No Lines in the Sand
People have been talking about lines in the sand since January of 2017, if not long before. There are no such lines. Perhaps yields break out, but, despite the strong second quarter, they still haven't.
Bloomberg Parroting Me?
Are a couple of Bloomberg authors following me or does it just look like it? I ask because this Bloomberg story is pretty peculiar: Bond Traders Get Ready for Yield-Curve Inversion as Soon as Next Week.
The title is not peculiar, the subtitles are:
- Gap between 7-10-year notes now around 4 basis points.
- Spread has been a harbinger of past three inversions
Why is it peculiar?
My comments: "This portion of the yield curve looks highly likely to invert soon. That said, predicting recessions off such divergences is clearly problematic."
Mike "Mish" Shedlock