Turbulent economic start to 2019
MONTHLY MARKET COMMENTARY |
The new year is off with a bang as market volatility from late 2018 continues. Plunging treasury yields, particularly in the front of the curve, sent the spread between 10-year and 2-year U.S. Treasuries to 0.16 percent. The U.S. Treasury curve has not been this flat since the summer of 2007, six months before the Great Recession.
In our view, the relatively flat yield curve does not portend a recession, but is consistent with a downshift in the global economic outlook against the backdrop of tightening financial conditions. The bond market is sending Federal Reserve policymakers a clear message: No more rate hikes!