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Ivan Martchev: The bond market is giving an early warning to the stock market

“It is well-known that the bond market is often early and moves before the stock market does” writes Ivan Martchev for marketwatch.com. Yet, the stock market keeps marching higher with no recession in sight.The difference between the 10-year Treasury note’s yield and the two-year Treasury note’s yield has now shrunk to 50 basis points.With the Dow Jones Industrial Average smashing through 25,000 last week, few are looking at the bond market, where the flattening of the Treasury yield curve continues.This is the definition of a shrinking yield curve slope, which is completely normal in a mature economic expansion (see chart).
 
Source: marketwatch.com



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