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I'm worried about a self fulfilling prophecy. Keep in mind the yield curve represents how the market prices US treasury bonds at differing maturities. When the
by formercoder 7y ago
I'm worried about a self fulfilling prophecy. Keep in mind the yield curve represents how the market prices US treasury bonds at differing maturities. When the LT bond yields drop, it's because everyone is buying them. That could happen for a multitude of exogenous reasons. Then though, everyone sees that the yield curve is flattening, panics because it's a recession predictor, and buys LT bonds, thus lowering LT yields further and creating a cycle.