What is an inverted yield curve and what does it really mean


What's the yield curve in version and does it mean we have to go into a recession because we don't want to right right so are you a current version means the short rate or the federal funds rate that is is or the two year rate is higher than the ten year or the thirty year upside down right the the long you take longer duration risk and you get less yield which that make any sense puppies kissing Katie's it just this is the world upside down it's pretty crazy yeah that the thirty year treasury trading at a just under two percent this week you know you can get more than that in a money market yeah that's okay well yeah I kinda like that no duration vanguard money market it to point to an Wes where we put the good save cash because I don't have any good muny sin I don't have I don't have a good place for it and I'll just keep some dry gunpowder maybe a third of the portfolio right there and that's the first investment strategy discussion if you don't like fluctuation there's there's a choice out there that's better than zero in cash one of the banks are still paying zero on big check and balance meanwhile yeah yeah you have to call them up and say Hey I get to I need to or close to it yeah and they get that for you yeah thank you we did an analysis interesting way on on the thirty year treasury yeah and currently priced at thirty two a two and a quarter percent coupon to twenty forty nine trading at about one of six and about a two percent yield okay if you get a move to zero right yeah which is that big price goes to almost one seventy I mean to make you could make sixty percent in a thirty year treasury you can make sixty percent if the thirty year went to zero and I don't know how likely that is no Greenspan as one of our headlines let me get to the Greenspan headline because that relates to it we got to skip around here to get the exact Greenspan says no barrier to prevent negative treasury yields he's never been wrong by the way Greenspan well we've all been wrong that's just part of the opportunity you get every day it's just better to admit it but he's so so what I put on that headline is is there no limit to duration stupidity now having a treasury go with the price that that makes me feel good but what happens if the yields just go back up to where they were last year all right Sir you're gonna take a twenty percent hit on Capitol for that treasury right so if you went from two to back to a three on the thirty year price goes from one of five eighty five yeah so if I put a million dollars and then I could wake up at eight hundred thousand you really good yeah yeah yeah and I would not be happy about that in a good safe treasury bond no no that's not when they when they sell you the long term government securities fund in the four one K. they don't tell you about duration risk it's not it's not explicitly spelled out like it is on the Bloomberg charts at network radio dot com right there okay so thank you for doing those charts what else did you see on those charts well if you want to get it if you if prices stayed stable how long would it take in coupon payments actually get your money back in this twenty three twenty four years twenty one time twenty three twenty four years so you could be stuck in that long term government security that's what they call it long term you could be stuck for full time if rates go back up okay just pointed out that yeah yeah so we're selling premium duration where possible and we're looking at global high yield and energy

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