A Bourse Diary

Thoughts on stocks, speculation and ... life

Wednesday, May 24, 2006

"Three of the scariest words in economics used to be inverted yield curve"

The 10-year treasury yields fell for the first time below the Fed funds rate since long time. Precisely since short before the great bear market in 2000 began.

Here is an article in CNNMoney: Yields throw the Fed a curve

But what is it about? - Are the investors not afraid of coming inflation? This was the most prominent explanation (excuse?) for the drop in the stock markets, wasn't it? If inflation is to come, the yields should point higher, right?

Maybe the investors are seeking a "safe heaven" - and I suppose first they will redraw some funds out of the more volatile and "insecure" markets as Emerging Markets and maybe commodities.

And by the way - in a globalized world the global yield curve matters more and more. And it is not inverted.

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Disclaimer: All ideas, opinions, and/or forecasts, expressed or implied herein, are for informational purposes only and are in no way intended to serve as personal investing advice and should not be construed as a recommendation to invest, trade, and/or speculate in the markets. Readers should not make any investment decision without first conducting their own thorough due diligence. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise. While the information provided is obtained from sources believed to be reliable, its accuracy or completeness cannot be guaranteed.