2-year yield > 5-year yield
2-year yield > 3-year yield
1-year yield > 7-year yield
1-year yield > 5-year yield
1-year yield > 3-year yield
1-year yield > 2-year yield
6-month yield > 5-year yield
6-month yield > 3-year yield
6-month yield > 2-year yield
6-month yield > 1-year yield
http://sg-stock.blogspot.com/2018/12/the-us-markets-fell-heavily-because-of.html
The investors are buying the longer maturities rather than the shorter maturities because they've lost faith in the short-term debts out of fear that the government has short-term cashflow problems. This is understandable from the investors' perspective because of the US government shutdown. Nobody will believe that the US government will shut down for a long period and this is the reason that the investors will still buy the longer dated treasuries.
What does a yield curve inversion signify?
ReplyDeleteBasically, it is a tightening monetary condition because access to cheap money is no longer available and investors are demanding a higher interest rate for the short-term risk they are taking.