The US treasury's situation is getting chaotic. - Part 2

The US bond market doesn't look good after the US Fed expressed its super dovish stance (No interest rate hikes in 2019 and termination of QT).

From the screen above, we can see the following yield curve inversions:
1m yield > 2m yield
1m yield > 3m yield
1m yield > 6m yield
1m yield > 1y yield
1m yield > 2y yield
1m yield > 3y yield
1m yield > 5y yield
1m yield > 7y yield

3m yield (2.49%)  < 10y yield (2.54%) = Spread is narrowing!

When the short term yield is more than the long term yield, it is a monetary tightening symptom.  Why?

When I was a finance student, I learnt the time value of money concept in the university.  Money is worth lesser and lesser into the future and it needs to be compensated if we use our monies for investment for the current period.  Therefore, the interest or yield return that we demand must commensurate with time.  In other words, the longer is the investment period, the higher is the interest.

Furthermore, uncertainty (risk) increases with time and we also must be compensated more for investing in a longer period.

When the short term yield is greater than the long term yield, it is showing that access to cheap money is no longer available because investors are demanding a higher interest rate for taking a short term risk.  This will create short term cash flow problems for many companies and defaults will rise.  This is something that the US Fed is trying to avoid by terminating the QT but the reality in the bond market is showing otherwise.

The preferred US Fed yield curve inversion indicator is the 3-month yield vs 10-year month yield.  The 3m-10y yield spread is narrowing and this is not a good sign.  When this indicator starts to invert, it is showing that the recession is in the offing.

https://sg-stock.blogspot.com/2019/01/the-us-treasurys-situation-is-getting.html