Yield Curve Inversion in About 100 Words

It doesn’t matter why the yield curve inverted.

There’s only 1 question that matters right now.

1.      How much capital trades, inverted?

Short term prices are always set by the marginal trader, not by “the market” reflecting a new economic reality. Access to US Treasuries is necessary for many entities rather than an expression of an investment belief. So far volumes on the CME have been elevated but not extraordinary.

Note: Unlike most technical metrics, volume of a US Treasury isn’t just a short term charting measure as it may be with stocks. It reflects actual lending and the interest associated and is worth keeping an eye on.

That’s it.

While the 2 year hasn’t been out of the ordinary either

As always, thanks for your time.

Basil