# Yield curve hits record high



## Chris (Dec 24, 2009)

NEW YORK (CNNMoney.com) -- The Treasury market is delivering on investors' holiday wish-list. Like most everyone else, it wants an economic recovery. And it's got a yield curve to prove it. 

The closely monitored yield curve -- a key predictor of the economy -- hit a record high Tuesday, signaling that investor optimism is rising as they eye riskier (and higher yielding) assets such as stocks.

The yield curve measures the difference between shorter-term 2-year notes and longer-term 10-year note yields. The figure is now at its highest level ever at 2.86 percentage points. It finished Monday at 2.78 points, which topped the previous record of 2.76 points set in June. A year ago, the gauge was at 1.29 percentage points.

So what does this mean to you? Well, when the spread between the interest rates of the two notes widens, or the yield curve rises, it typically indicates that the economy is headed for recovery. And that's welcome news for an economy that has been mired in recession for nearly two years.

The last time the yield curve was near current levels was 1992 and 2003.

In July 1992, the yield curve was at 2.6 percentage points, and the following year, the gross domestic product -- the broadest measure of the economy -- grew nearly 3%. In July 2003, the yield curve was 2.75 points, and GDP grew almost 4% the following year.

Treasury yields suggest recovery - Dec. 22, 2009


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## oreo (Dec 24, 2009)

Chris said:


> NEW YORK (CNNMoney.com) -- The Treasury market is delivering on investors' holiday wish-list. Like most everyone else, it wants an economic recovery. And it's got a yield curve to prove it.
> 
> The closely monitored yield curve -- a key predictor of the economy -- hit a record high Tuesday, signaling that investor optimism is rising as they eye riskier (and higher yielding) assets such as stocks.
> 
> ...




You get that large of a difference on the yield curve it only means one thing.  Higher interest rates & inflation.  It's all this government spending coming back to bite us in the arse.  Which in turn--will bring this economy right back down on it's knees.

Last time this happened we had double digit inflation--interest rates--30 yr. fixed mortgage rates at 18% & unemployment at 10%.

This is really nothing to cheer about--it's just a sign that it is beginning.  Mortgage interest rates have been artifically low for many-many years--now the pay back is going to be hell.


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## Chris (Dec 24, 2009)

oreo said:


> Chris said:
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> 
> > NEW YORK (CNNMoney.com) -- The Treasury market is delivering on investors' holiday wish-list. Like most everyone else, it wants an economic recovery. And it's got a yield curve to prove it.
> ...



I kind of feel sorry for you. Making things up.

The last time the yield curve was near current levels was 1992 and 2003.

America is going to come back big time.


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## oreo (Dec 24, 2009)

Chris said:


> oreo said:
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If this is your experience (from 1992 to 2003) then it is I that feel sorry for you.  For many decades I have traded securities--& bonds.  Bragging about a yield curve that is signalling the start of higher interest rates in economic circumstances that we are currently in--is devastating for growth in this country.  

The figures I quoted you are correct--18% 30 year fixed mortgages is what is coming.  Look that one up--but you'll to go back farther than 1992--  Try 1979--through 1982.


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## Chris (Dec 24, 2009)

oreo said:


> Chris said:
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I don't have to look it up. I was in the real estate business then.

I know you want the worst to happen, but it isn't going to. We have very good leadership now. Obama is focusing on the things that matter...healthcare, energy, and getting out of Iraq. We are going to be fine.

George Bush was a disaster, but we will recover.


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## rightwinger (Dec 24, 2009)

Looks like the economy is recovering..

Great news for all Americans....bad news for those who banked on the economy failing


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## CrusaderFrank (Dec 24, 2009)

There aren't enough Democrats working in the private sector so it's easy for them to totally misunderstand what things mean or how things work. 

Maybe you can look to melting polar ice caps as a sign of economic recovery?


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## Toro (Dec 24, 2009)

Generally, when the yield curve is steep, it is forecasting economic growth.

That is probably the case today, but this is also a very different type of recession than we've had since WWII and the dynamics are unknown given the extraordinary amount of interference by the economy.


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## &#9773;proletarian&#9773; (Dec 24, 2009)

I don't care about the yield curve or how you want to spin it.

mark my words: if the federal government continues to expand deficit spending and we continue to have a central bank run by neo-Keynesian fucktards, we will experience a series of collapses that will get worse. This system simply is not stable.


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## Chris (Dec 24, 2009)

NEW YORK (CNNMoney.com) -- Stocks ended a holiday-shortened session higher Thursday, with indexes climbing to new highs for the year after upbeat reports on the labor market and durable goods orders fueled optimism about the economic recovery. 

The Dow Jones industrial average (INDU) rose 53 points, or 0.5%. The S&P 500 index (SPX) rose 6 points, or 0.5%. Both gauges are at the highest level since the first week of October 2008. The Nasdaq composite (COMP) gained 16 points, or 0.7%, to the highest level since Sept. 3, 2008.

CNNMoney.com Market Report - Dec. 24, 2009


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## rdean (Dec 24, 2009)

Chris said:


> NEW YORK (CNNMoney.com) -- Stocks ended a holiday-shortened session higher Thursday, with indexes climbing to new highs for the year after upbeat reports on the labor market and durable goods orders fueled optimism about the economic recovery.
> 
> The Dow Jones industrial average (INDU) rose 53 points, or 0.5%. The S&P 500 index (SPX) rose 6 points, or 0.5%. Both gauges are at the highest level since the first week of October 2008. The Nasdaq composite (COMP) gained 16 points, or 0.7%, to the highest level since Sept. 3, 2008.
> 
> CNNMoney.com Market Report - Dec. 24, 2009



Prepare yourself for a deluge of Republicans congratulating former president Bush.


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## Chris (Dec 24, 2009)

&#9773;proletarian&#9773;;1839896 said:
			
		

> I don't care about the yield curve or how you want to spin it.
> 
> mark my words: if the federal government continues to expand deficit spending and we continue to have a central bank run by neo-Keynesian fucktards, we will experience a series of collapses that will get worse. This system simply is not stable.



The system is stable.

Glenn Beck is not stable, however.


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## Chris (Dec 24, 2009)

rdean said:


> Chris said:
> 
> 
> > NEW YORK (CNNMoney.com) -- Stocks ended a holiday-shortened session higher Thursday, with indexes climbing to new highs for the year after upbeat reports on the labor market and durable goods orders fueled optimism about the economic recovery.
> ...



   Good one.

America is coming back.

Now if we can just get rid of the U.S. Senate, we will be in business.


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## &#9773;proletarian&#9773; (Dec 24, 2009)

What does Glenn Beck have to do with anything?

And no, a neo-Keynesian economy marked by an inflated money supply, moral hazard of the most unsound investments, massive deficit spending, and borrowing from nations that would like to see you gone is not stable, my dimwitted friend.


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## Avatar4321 (Dec 24, 2009)

Not hard to reach highs when you dropped so low this past year.


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## Avatar4321 (Dec 24, 2009)

I hope the economy is recovering. But Im not optimistic just because some article tells me so. Especially when the Senate has been working hard today to disrupt one of the largest industries in our economy.


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## &#9773;proletarian&#9773; (Dec 24, 2009)

The economy will recover when we cut deficit spending, rectify the import/export balance, get the illegals out of the counrty and send employers who knowingly hire them to prison, and put an end to artificially low interest rates, bailouts, and the inflated money supply.

It's that simple.


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## kyzr (Dec 24, 2009)

How bad could Bush and the GOP screw the economy up......10% unemployment and rising

after Obama we could see another depression.....unless he finds a lot of hidden loot in those numbered Swiss bank accounts and other off-shore accounts.


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## Chris (Dec 25, 2009)

Avatar4321 said:


> Not hard to reach highs when you dropped so low this past year.



It sucks being a Republican, doesn't it?


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## loosecannon (Dec 25, 2009)

Chris said:


> NEW YORK (CNNMoney.com) -- The Treasury market is delivering on investors' holiday wish-list. Like most everyone else, it wants an economic recovery. And it's got a yield curve to prove it.
> 
> The closely monitored yield curve -- a key predictor of the economy -- hit a record high Tuesday, signaling that investor optimism is rising as they eye riskier (and higher yielding) assets such as stocks.
> 
> ...



A high yield curve is a prediction of high long term inflation. This particular yield curve is inaccurate as the short term bond prices are suppressed by the super low interest rates that the Fed is still offering to banks that participated in TARP. 

There are other interpretations of a high yield curve as well. Such as the potential for a downgrade of US bonds credit worthiness over a 10 period.


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## saveliberty (Dec 25, 2009)

Clear sign of impending inflation.  This is not going to be pretty.  Will the doctor be making cardboard box calls?


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## Avatar4321 (Dec 25, 2009)

Chris said:


> Avatar4321 said:
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> > Not hard to reach highs when you dropped so low this past year.
> ...



Not at all. I enjoy it quite nicely.

I hope you have a very Merry Christmas


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## Chris (Dec 25, 2009)

Avatar4321 said:


> Chris said:
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I will.

Now that the economy is recovering.


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## Missourian (Dec 25, 2009)

Why isn't this in the Stock Market Forum?


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## Avatar4321 (Dec 25, 2009)

Chris said:


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You do realize that the stock market and the economy are two separate entities right?


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## Gunny (Dec 25, 2009)

Missourian said:


> Why isn't this in the Stock Market Forum?



Must you debase yourself posting ina  thread that Chrissy and Rdone are the main contributors?  

I'm thinking you need to share that eggnog.


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## Chris (Dec 25, 2009)

Gunny said:


> Missourian said:
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> > Why isn't this in the Stock Market Forum?
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Merry Christmas to you too, Gunny.


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## Chris (Dec 25, 2009)

Avatar4321 said:


> Chris said:
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Do you do any reading at all?

WASHINGTON - The U.S. economy grew in the third quarter at a 2.2 percent pace - but the gain was less than previously estimated, the government reported yesterday.
Even so, all signs suggest the economy will end 2009 on firmer footing as it bounces back from the recession.

The Commerce Department's new reading on gross domestic product for the July-to-September quarter was weaker than the 2.8 percent growth rate it estimated a month ago. Yesterday's report was the final one on the third-quarter GDP, and economists had predicted this figure would remain the same as last month's estimate.

The GDP, the broadest gauge of the economy, measures the value of all goods and services produced in the United States.

The main factors behind the downgrade to 2.2 percent were that consumers didn't spend as much as previously estimated, commercial construction was weaker, business investment in equipment and software was softer and companies cut back more on their stockpiles of goods.

Still, the economy managed to return to growth during the quarter after a record four straight quarters of decline. That signaled that the deepest and longest recession since the 1930s had ended and the economy had entered a fragile recovery.

The recession's end has not been declared by the arbiter of such data, the National Bureau of Economic Research. But it generally does not date the start and end of recessions until it analyzes months of economic figures.

*Many analysts still think the economy is on track for a better finish to 2009 in the current quarter. One sign was a separate report yesterday that home resales surged in November to their highest level in nearly three years, thanks to an extraordinary level of federal support. The report added to evidence that the housing market, which led the country into recession, is on the mend.

For the fourth quarter, the economy is probably growing at nearly 4 percent annual rate, analysts said. A few peg it closer to 5 percent.*
GDP growth slows, recovery still on track | Philadelphia Inquirer | 12/23/2009


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## The Rabbi (Dec 25, 2009)

Toro said:


> Generally, when the yield curve is steep, it is forecasting economic growth.
> 
> That is probably the case today, but this is also a very different type of recession than we've had since WWII and the dynamics are unknown given the extraordinary amount of interference by the economy.



Or it is signaling future inflation, which is what I suspect. ANd I further think it will be of the stagflation variety, rising prices and high unemployment ala Jimmy Carter.

And Chris is a tool, in case anyone missed that.


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## william the wie (Dec 25, 2009)

Chris said:


> I kind of feel sorry for you. Making things up.
> 
> The last time the yield curve was near current levels was 1992 and 2003.
> 
> America is going to come back big time.


 Relative to the rest of the world certainly. A much higher proportion of US liabilities public and private are on the books than is true for the rest of the world. 

But saying that the US is a region of relative financial sanity vs. the EU, Far East, ME, Latin America, Africa and Oceania, which is true and reflected in the yield curve, is not the same as saying the US is in good shape. All the yield curve is indicating is that the US is not likely to do nearly as bad as the rest of the world and considered all the worldwide sovereign defaults stacked up and waiting to happen that is not comforting. I read it as the smart money figuring on the Chinese bubble bursting, Japan collapsing, the EU busting up and the third world coming apart at the seams. The US could end up doing very badly indeed in that scenario and still beat the rest of the world like a drum.


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## uscitizen (Mar 5, 2010)

"What does Glenn Beck have to do with anything?"

Now that is a very good question, whether in the context of this thread or anything else.


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