Yesterday in an interview on CNBC TV St Louis Fed president James Bullard noted that changes in the US bond market are the main focus for investors currently. ‘’I think the state of affairs is good for today. The question is how to play things going forward over the next two years. If the Fed raises rates 50 basis points and the 10-year [Treasury bond] does not cooperate, you could see an inverted yield curve in the US. Yield curve inversion has a tremendous track record of predicting recessions’’.
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