Andrei Jikh: a call with no clear direction

The window it was checked over

10-year minus 2-year Treasury yield: Federal Reserve Bank of St. Louis via FRED, figures as first published. The shaded span is the window the call was checked over; grey bands are recessions.

What was said around it

remember, whenever there's a recession, how do you stimulate the economy? We learned in 2019, it's by dropping rates to zero and making it cheap to borrow money. So, all of this means is that in the short term, it becomes more profitable to hold on to short-term bonds than long-term bonds, which is a flip. There's an inversion and that's a very bad sign. The last time the yield curve inverted was in August of 2019 and sure enough, there was a recession. Now, so far the yield on the 10-year Treasury bond is floating somewhere around 2% and the federal fund rate at 0.25%. So, on the surface, it looks like it's dangerously close to dropping below that horizontal line, but personally, I don't think it will. I don't think we're going to invert, but maybe that's because I'm gullible and I believe what Papa Powell has been telling us. Remember, for the last year, he's been money printer go brr, buying mortgage-backed securities and Treasury bonds. And he's told us that he's going to start offloading or selling those assets. And whenever you start selling a lot of something like bonds, the price of them will go down, but their yields will go up, which will hopefully decrease the odds of inverting

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