Mike
12-30-2005, 01:58 AM
http://money.cnn.com/2005/12/27/news/economy/inverted_yield_curve/index.htm
To summarize/paraphrase:
- This time is different than other inversions, since long term rates have stayed flat while short term ones have climbed - apparently in previous inversions, both ends of the yield curve were moving up, but the short term was simply climbing more rapidly.
- Companies have been more cautious this year than in 2000 (year of the last inversion), with many of them flush with cash.
- The financial sector won't be as hard-hit due to banks branching out into other non-lending activities such as asset management.
- Interpret the inversion as a "flashing yellow light" but don't bail on investments (of course they'd say that - they want you in the market while they engage in profit-taking :P).
To summarize/paraphrase:
- This time is different than other inversions, since long term rates have stayed flat while short term ones have climbed - apparently in previous inversions, both ends of the yield curve were moving up, but the short term was simply climbing more rapidly.
- Companies have been more cautious this year than in 2000 (year of the last inversion), with many of them flush with cash.
- The financial sector won't be as hard-hit due to banks branching out into other non-lending activities such as asset management.
- Interpret the inversion as a "flashing yellow light" but don't bail on investments (of course they'd say that - they want you in the market while they engage in profit-taking :P).