Investment Advisory Services Featured Market Data
Growth Concerns Invert Yield Curve
On March 22, amid signs of weaker global growth, 10-year US Treasuries closed at a lower yield compared to 3-month Treasury Bills for the first time since 2007. This inversion of the Treasury curve continued the next four trading days. An inverted yield curve means investors think short-term rates will fall. Since the Fed normally cuts rates during periods of economic weakness, it is not surprising that the yield curve has inverted before each of the last seven recessions. However, Fed rate cuts and an inverted yield do not always lead to recessions, such as in 1998 when the Fed cut rates three times and the economy avoided recession. When an inverted yield curve preceded a recession, the inversion typically continued for over a month and preceded the recession by 1 to 2 years.
Source: Wall Street Journal, Bloomberg
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Global Growth Slows
March surveys of purchasing managers showed slower manufacturing growth for factories in the eurozone as well as for major Asian exporters such as Japan and South Korea. Europe’s factories continued to struggle with lower exports, partly driven by trade disputes with the U.S. and its trading partners. Slower demand from China has also impacted European manufacturers. China, meanwhile, reported stronger manufacturing activity; however, economists attributed these gains to support measures from Beijing such as tax cuts and infrastructure spending. Global growth should remain a major focus for markets.
Source: Wall Street Journal, Bloomberg
