Here we go:
Here are a few yield curves over the past which we have been following. There is a clear inversion. In a sense if you borrowed money say at 3 years you paid 1.5% but if then turned around and loaned it at 90 days you got 2% and thus with no real money you got 0.5% interest. Since theoretically if there were no limit on what you borrowed you could get rich quick. Except you do not know what the rate will be in say six months. But if you are a bank who cares.
Second point, most of the Treasury debt is short term, really in the 3 year range so this should be good. Our interest payments should be deceasing, but not as low as when we had the bank collapse.
Above is the actual spread of 10 years vs 90 days. It is negative and almost at the 0.5% level we just discussed. The long term rate reflects anticipated growth and the short term rate uncertainty on what is next. One question we should ask, is this all being manipulated and by whom? You can manipulate short term very easily, you go in and out of the market and have the FED complicit in the process. Are we seeing pre 2020 election manipulation but done domestically?
Just look at the short term rates. They have taken off after the 2016 election, some reduction but not much. The FEDs balance sheet is still a mess, a lot of useless paper resulting from the incompetence of the great recession of 2008.
The questions we should be asking are: (i) do we have any major systemic internal financial collapse issues?, (ii) can a recession be driven domestically for political gains?, (iii) if so one must ask by whom and who can solve the problem, or it just a political move?
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