Inverted Yield Curve Not Necessarily Recession Indicator
Jim Lowell, chief investment officer at Adviser Investments, joined CNBC to discuss last Friday’s brief inversion of the yieldYield is a measure of the income on an investment in relation to the price. There are several ways to measure yield. The current yield of a security is the income over the past year (either dividends or coupon payments) divided by the current price. spread between 3-month and 10-year Treasury bondsA financial instrument representing an IOU from the borrower to the lender. Bond issuers promise to pay bond holders a given amount of interest for a pre-determined amount of time until the loan is repaid in full (otherwise known as the maturity date). Bonds can have a fixed or floating interest rate. Fixed-rate bonds pay out a pre-determined amount of interest each year, while floating-rate bonds can pay higher or lower interest each year depending on prevailing market interest rates.. Jim noted although markets responded with across-the-board losses for all major U.S. indexes on Monday, the inverted yield curve is not necessarily predictive of a recession. He also addressed a host of variables that include Brexit, trade discussions with China, interest-rate action and Mueller investigation fallout.