🦧 deepest spread so far

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normally speaking…

a yield curve is upward sloping, meaning: longer-term bonds have higher yields than short-term ones, because if you're lending your money to an entity for a longer time, that's added risk and you should get rewarded a higher yield

• we've been at an inverted yield curve, specifically the us treasuries yield curve

• as you see in the image above, as of writing, shorter term us treasury bonds (i.e. 2-year bond at 4.25% annualized) have way higher yield than longer term us treasury bonds (i.e. 10-year bond at 3.53% annualized)

what’s inverted mean anyways?

• aside from the curve being downward sloping than upward sloping (as it normally should be), an inverted yield curve means that the market's pricing in a recession

• in an economic downturn (like today's), investors tend to buy longer-dated bonds over short-dated bonds, which would bid up the price of longer bonds, driving down longer-term bond yields even more

how bad is it at the moment?

• at the moment, 10-year us treasury yields are 0.78% below that of 2-year yields, the widest negative gap since 1981

  • this is also called the “10-2 year treasury yield spread"

• the 10-2 year treasury yield spread should normally be positive (as 10 year treasury yields are typically higher than that of 2 year treasuries), but as you can see here, the spread's getting increasingly negative as the year progresses

happy december!

💡 something im thinking about

12k pound metal sculpture of elon musk's head (with a goat bod) was delivered to TSLA 0.00%↑'s headuarters (click image)

that's all, folks 🐒

as always, i’m no financial advisor! (i’m no substitute for professional financial services)