James Bullard says Fed should cut rates because inverted yield curve is ‘not a good place to be’

That’s not a good place to be,” Bullard told CNBC’s Steve Liesman during an interview in Jackson Hole, Wyoming. There is concern that slower global growth and the trade war could drag down the U.S. economy. The Fed already cut rates in July by 25 basis points, citing “global developments” and “muted inflation.” So there is some downside risk, and I think you’d like to take out insurance against that downside risk, ” Bullard said. His comments come hours before a speech at the Fed symposium in Wy


That’s not a good place to be,” Bullard told CNBC’s Steve Liesman during an interview in Jackson Hole, Wyoming. There is concern that slower global growth and the trade war could drag down the U.S. economy. The Fed already cut rates in July by 25 basis points, citing “global developments” and “muted inflation.” So there is some downside risk, and I think you’d like to take out insurance against that downside risk, ” Bullard said. His comments come hours before a speech at the Fed symposium in Wy
James Bullard says Fed should cut rates because inverted yield curve is ‘not a good place to be’ Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-08-23  Authors: fred imbert
Keywords: news, cnbc, companies, fed, rates, cut, risk, james, yield, place, trade, war, curve, yieldcurve, come, bullard, week, global, inverted, good


James Bullard says Fed should cut rates because inverted yield curve is 'not a good place to be'

St. Louis Federal Reserve President James Bullard said Friday the central bank should continue to ease monetary policy because of the recession signal being flashed by the bond market.

“The yield curve is inverted here. We’ve got one of the higher rates on the yield curve here. That’s not a good place to be,” Bullard told CNBC’s Steve Liesman during an interview in Jackson Hole, Wyoming.

The so-called yield-curve inversion refers to the 10-year Treasury yield trading below its 2-year counterpart. This briefly happened this week and last week. Experts fear a yield-curve inversion because it has historically preceded a recession.

These moves in the bond market come as economic growth across the globe is slowing down while China and the U.S. remain engaged in a trade war. There is concern that slower global growth and the trade war could drag down the U.S. economy.

The Fed already cut rates in July by 25 basis points, citing “global developments” and “muted inflation.” Bullard said further cuts would help lift inflation in the U.S. and mitigate the impact of a global economic slowdown.

“The question is: Looking forward, how much risk are we facing from the fact that you’ve got a global manufacturing contraction going on and possibly more to come? So there is some downside risk, and I think you’d like to take out insurance against that downside risk, ” Bullard said. He added that the Fed could always “take back” an insurance rate cut.

His comments come hours before a speech at the Fed symposium in Wyoming from Fed Chairman Jerome Powell. Bullard is a voting member of the Federal Open Market Committee this year.

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Company: cnbc, Activity: cnbc, Date: 2019-08-23  Authors: fred imbert
Keywords: news, cnbc, companies, fed, rates, cut, risk, james, yield, place, trade, war, curve, yieldcurve, come, bullard, week, global, inverted, good


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Bullard says Fed should ‘take out the insurance’ with a rate cut and can always take it back

St. Louis Fed President James Bullard likes the idea of an “insurance” rate cut from the Federal Reserve. Insurance cuts were used in 1995 and 1998 by the Alan Greenspan-led Fed to combat an economic slowdown and successfully prolong the expansion that wound up being the second longest in U.S. history. “I think that’s a good model or baseline case for what could happen here,” said Bullard. “There’s some downside risk, and I think you’d like to take out some insurance against that downside risk a


St. Louis Fed President James Bullard likes the idea of an “insurance” rate cut from the Federal Reserve. Insurance cuts were used in 1995 and 1998 by the Alan Greenspan-led Fed to combat an economic slowdown and successfully prolong the expansion that wound up being the second longest in U.S. history. “I think that’s a good model or baseline case for what could happen here,” said Bullard. “There’s some downside risk, and I think you’d like to take out some insurance against that downside risk a
Bullard says Fed should ‘take out the insurance’ with a rate cut and can always take it back Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-08-23  Authors: maggie fitzgerald
Keywords: news, cnbc, companies, cut, think, risk, rates, thats, yield, rate, cuts, bullard, insurance, inverted, fed


Bullard says Fed should 'take out the insurance' with a rate cut and can always take it back

St. Louis Fed President James Bullard likes the idea of an “insurance” rate cut from the Federal Reserve.

“You take out the insurance, if nothing happens you take it back,” Bullard told CNBC’s Steve Liesman on Friday from the Fed’s economic policy symposium in Jackson Hole, Wyoming.

“It’s always the case with insurance that you can say: ‘Well, you made these cuts and it turned out the economy continued to grow.’ That’s OK, you can just come back and take the cuts back,” he said.

Insurance cuts were used in 1995 and 1998 by the Alan Greenspan-led Fed to combat an economic slowdown and successfully prolong the expansion that wound up being the second longest in U.S. history. The central bank slashed interest rates three times, a total of 75 basis points, during both periods against risks stemming from Mexican and Russian defaults and the collapse of hedge fund Long-Term Capital Management.

“I think that’s a good model or baseline case for what could happen here,” said Bullard.

A global manufacturing contraction and a U.S.-China trade war are weighing on global growth, said Bullard.

“There’s some downside risk, and I think you’d like to take out some insurance against that downside risk and I’d like to take out more insurance,” said Bullard. “We can take the insurance back next year if it turns out that this is all going to blow over.”

Bullard, who is a voting member of the Federal Open Market Committee this year, also said the Fed should cut rates because inverted yield curve is “not a good place to be.”

The bond market’s main yield curve inverted briefly for the third time in less than two weeks on Thursday.


Company: cnbc, Activity: cnbc, Date: 2019-08-23  Authors: maggie fitzgerald
Keywords: news, cnbc, companies, cut, think, risk, rates, thats, yield, rate, cuts, bullard, insurance, inverted, fed


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The inverted yield curve is doing something weird to mortgage rates

The inverted yield curve isn’t just spooking people over a possible recession – it’s doing weird things to mortgage rates, too. The gap isn’t big of course, as we’ve got a flat to inverted yield curve, but the traditional relationship holds.” And that’s precisely what is so interesting — that flat to inverted yield curve. In the past, an inverted yield curve has signaled an impending recession. “People want variable rates at the beginning of a Fed rate-cutting cycle, and lenders generally would


The inverted yield curve isn’t just spooking people over a possible recession – it’s doing weird things to mortgage rates, too. The gap isn’t big of course, as we’ve got a flat to inverted yield curve, but the traditional relationship holds.” And that’s precisely what is so interesting — that flat to inverted yield curve. In the past, an inverted yield curve has signaled an impending recession. “People want variable rates at the beginning of a Fed rate-cutting cycle, and lenders generally would
The inverted yield curve is doing something weird to mortgage rates Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-08-22  Authors: diana olick
Keywords: news, cnbc, companies, fixed, fixedrate, yield, rates, mortgage, inverted, arms, lower, interest, curve, weird, doing


The inverted yield curve is doing something weird to mortgage rates

The inverted yield curve isn’t just spooking people over a possible recession – it’s doing weird things to mortgage rates, too.

Traditionally, adjustable-rate mortgages, or ARMs, offer lower interest rates than fixed-rate loans, because they are slightly riskier, and borrowers don’t want to pay more for more risk. ARMs can carry a fixed rate for five, seven or 10 years, and most today require some principal payment as well. No matter what the length of the fixed-rate term, they are all amortized over 30 years, so the payments will be relatively comparable to fixed-rate loans.

It is therefore very odd to suddenly see ARMs showing higher interest rates than the traditional 30-year fixed, which is what Bankrate.com is currently showing for average purchase mortgage rates. Refinance rates are still lower for ARMs.

So what’s going on? First, ARM rates are all over the place lender to lender because they are a very small percentage of new loan originations today, around 6% of total mortgage application volume, according to the Mortgage Bankers Association.

“The averages you see on the site are based on what quotes have been posted to the site, so small and inconsistent sample size on the ARMs,” said Greg McBride, chief financial analyst at Bankrate.com. “Our weekly national survey on the other hand, does show what we’d expect to see – ARM rates lower than fixed. The gap isn’t big of course, as we’ve got a flat to inverted yield curve, but the traditional relationship holds.”

And that’s precisely what is so interesting — that flat to inverted yield curve. The gap between ARMs and fixed-rate loans is now really small because of the inverted yield curve, which, without getting too technical, is a rare scenario where long-term interest rates suddenly fall below short-term interest rates. In the past, an inverted yield curve has signaled an impending recession.

“Longer-term rates (like the 30-year mortgage) are now equal to or lower than one-year rates (like the indexes used with most ARMs),” explained Guy Cecala, publisher and CEO of Inside Mortgage Finance. “Bad time to get an ARM.”

Of course we are looking at averages here, and every borrower has a different financial scenario – credit score, net worth, loan down payment, etc. – and will therefore be offered a different rate. And of course rates vary depending on the lender, especially when it comes to ARMs.

“Rates are all over the place. Some lenders want/need the variable cash flows to offset fixed-rate exposure,” said Matthew Graham, chief operating officer of Mortgage News Daily. “People want variable rates at the beginning of a Fed rate-cutting cycle, and lenders generally would prefer fixed rates of return when rates are declining.”


Company: cnbc, Activity: cnbc, Date: 2019-08-22  Authors: diana olick
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Dallas Fed’s Kaplan says he’d like to avoid cutting rates again in September, but has ‘open mind’

Dallas Fed President Robert Kaplan would like to avoid additional stimulus but is keeping an “open mind.” Kaplan said the Fed’s GDP forecast of 2% growth this year has risks to the “downside.” Holding up is the consumer economy, the biggest part of the economy. Kaplan also addressed concerns about the inverted yield curve. Earlier on Thursday, Kansas City Fed President Esther George said the July rate cut “wasn’t required ” and Philadelphia Fed President Patrick Harker said he doesn’t see the ca


Dallas Fed President Robert Kaplan would like to avoid additional stimulus but is keeping an “open mind.” Kaplan said the Fed’s GDP forecast of 2% growth this year has risks to the “downside.” Holding up is the consumer economy, the biggest part of the economy. Kaplan also addressed concerns about the inverted yield curve. Earlier on Thursday, Kansas City Fed President Esther George said the July rate cut “wasn’t required ” and Philadelphia Fed President Patrick Harker said he doesn’t see the ca
Dallas Fed’s Kaplan says he’d like to avoid cutting rates again in September, but has ‘open mind’ Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-08-22  Authors: maggie fitzgerald
Keywords: news, cnbc, companies, dallas, fed, yield, rates, hed, open, feds, rate, president, consumer, cutting, kaplan, economy, curve, months, avoid, growth, mind


Dallas Fed's Kaplan says he'd like to avoid cutting rates again in September, but has 'open mind'

Dallas Fed President Robert Kaplan would like to avoid additional stimulus but is keeping an “open mind.”

“I’d like to avoid having to take further action but I think I’m going to have an open mind about taking action over the next number of months if we need to,” Kaplan told CNBC’s Steve Liesman on Thursday from the Federal Reserve’s economic policy symposium in Jackson Hole, Wyoming.

Kaplan said the Fed’s GDP forecast of 2% growth this year has risks to the “downside.”

“Even though the consumer is very strong and a key underpinning to the economy, manufacturing sector is weak and probably weakening and global growth decelerating is probably finding its way to seep into the U.S. economy,” said Kaplan.

U.S. manufacturer growth slowed to the lowest level in almost 10 years in August, according to data released Thursday. The U.S. manufacturing PMI (purchasing managers’ index) was 49.9 in August, down from 50.4 in July and below the neutral 50.0 threshold for the first time since September 2009, according to IHS Markit.

Holding up is the consumer economy, the biggest part of the economy. In the second-quarter, personal consumption expenditures rose 4.3%, the best performance in six quarters.

“As long as the consumer stays strong we are going to have solid growth,” said Kaplan.

Kaplan also addressed concerns about the inverted yield curve. He said he is less “obsessed” with the little movements in the curves “back and forth.”

“I’m more focused on the fact that the whole curve has moved down over the last three and a half months and the fed funds rate at two to two and a quarter is now above every rate along the curve which to me is a bit of a reality check that says it’s possible our monetary policy stays a little tighter than I would have thought three or four months ago,” he said.

Earlier on Thursday, Kansas City Fed President Esther George said the July rate cut “wasn’t required ” and Philadelphia Fed President Patrick Harker said he doesn’t see the case for additional stimulus.

Following their comments, the bond market’s main yield curve inverted briefly for the third time in less than two weeks on concern that maybe the Fed wouldn’t do enough to save the economy from a recession.

Kaplan is a nonvoting member this year of the Fed’s Open Market Committee.


Company: cnbc, Activity: cnbc, Date: 2019-08-22  Authors: maggie fitzgerald
Keywords: news, cnbc, companies, dallas, fed, yield, rates, hed, open, feds, rate, president, consumer, cutting, kaplan, economy, curve, months, avoid, growth, mind


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Fed’s Harker doesn’t see need for another rate cut, says central bank should stay here ‘for a while’

Philadelphia Fed President Patrick Harker said Thursday that while he went along with the central bank’s rate cut in July, he doesn’t see the case for additional stimulus. And I think we should stay here for a while and see how things play out,” Harker told CNBC’s Steve Liesman from the central bank’s annual symposium in Jackson Hole, Wyoming. This marked the first rate cut since the start of the financial crisis more than a decade ago. Bonds ticked up after Kansas City Fed President Esther Geor


Philadelphia Fed President Patrick Harker said Thursday that while he went along with the central bank’s rate cut in July, he doesn’t see the case for additional stimulus. And I think we should stay here for a while and see how things play out,” Harker told CNBC’s Steve Liesman from the central bank’s annual symposium in Jackson Hole, Wyoming. This marked the first rate cut since the start of the financial crisis more than a decade ago. Bonds ticked up after Kansas City Fed President Esther Geor
Fed’s Harker doesn’t see need for another rate cut, says central bank should stay here ‘for a while’ Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-08-22  Authors: thomas franck
Keywords: news, cnbc, companies, doesnt, fed, yield, stay, basis, need, feds, neutral, central, harker, cut, rate, banks, markets, bank


Fed's Harker doesn't see need for another rate cut, says central bank should stay here 'for a while'

Philadelphia Fed President Patrick Harker said Thursday that while he went along with the central bank’s rate cut in July, he doesn’t see the case for additional stimulus.

“We’re roughly where neutral is. It’s hard to know exactly where neutral is, but I think we’re roughly where neutral is right now. And I think we should stay here for a while and see how things play out,” Harker told CNBC’s Steve Liesman from the central bank’s annual symposium in Jackson Hole, Wyoming.

At its July policy meeting the Federal Reserve appeased markets by cutting the target range for its overnight lending rate 25 basis points, to a target range of 2% to 2.25%. This marked the first rate cut since the start of the financial crisis more than a decade ago.

Harker, who isn’t a voting member of the Federal Open Market Committee, said that while he offered tepid support for the central bank’s 25 basis point cut in July, he’d prefer to wait and see before advocating for more easing.

Asked if he sees a case for further stimulus, Harker replied “No. Not right now.”

“The labor markets are strong, inflation is moving up slowly — but with the last CPI print, it was a good print,” he said.

Following Harker’s comments, the bond market’s main yield curve inverted for the third time in less than two weeks. The yield on the 2-year Treasury was at 1.601% while the 10-year yield was below at 1.597%.

Harker was not the only central banker commenting on the level of interest rates Thursday morning. Bonds ticked up after Kansas City Fed President Esther George said the July rate cut was not “required. ”

Though investors remained confident on Thursday that the central bank will cut again in September, those expectations waned after the Fed commentary.

Traders were pricing in a 90% probability of a 25 basis point cut following Harker’s and George’s comments, according to the CME’s FedWatch Tool, down about 8 percentage points from the prior session.


Company: cnbc, Activity: cnbc, Date: 2019-08-22  Authors: thomas franck
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Bond market yield curve inverts, signaling Fed may be too slow to cut rates, risks recession

It then briefly inverted later Wednesday afternoon, with the 2-year yield rising above the 10-year yield . Other parts of the yield curve have inverted and remain that way, but the 2-year-to-10-year spread is the most widely watched. An inverted yield curve, if it stays inverted for awhile, is considered a strong recession warning. “Looks like the Fed is going to be stubborn, and the yield curve is starting to price that in,” noted Andy Brenner of National Alliance. The Federal Open Market Commi


It then briefly inverted later Wednesday afternoon, with the 2-year yield rising above the 10-year yield . Other parts of the yield curve have inverted and remain that way, but the 2-year-to-10-year spread is the most widely watched. An inverted yield curve, if it stays inverted for awhile, is considered a strong recession warning. “Looks like the Fed is going to be stubborn, and the yield curve is starting to price that in,” noted Andy Brenner of National Alliance. The Federal Open Market Commi
Bond market yield curve inverts, signaling Fed may be too slow to cut rates, risks recession Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-08-21  Authors: patti domm
Keywords: news, cnbc, companies, powell, curve, yield, slow, inverted, rates, recession, fed, inverts, feds, signaling, meeting, rate, cut, risks, market


Bond market yield curve inverts, signaling Fed may be too slow to cut rates, risks recession

Soon after the Fed’s 2 p.m. ET release of its minutes, the curve between the 2-year note and the 10-year note flattened. It then briefly inverted later Wednesday afternoon, with the 2-year yield rising above the 10-year yield . That also occurred briefly last week, but did not hold on a closing basis. Other parts of the yield curve have inverted and remain that way, but the 2-year-to-10-year spread is the most widely watched.

Market moves were modest after the Fed released minutes of its last meeting, but the message was clear — the market still fears the Federal Reserve will not be aggressive enough in its rate cutting to save the economy.

Fed Chairman Jerome Powell speaks Friday, and the pressure is on him to clarify the central bank’s current stance on policy. Market pros are looking for Powell to resolve a debate within the market, over whether the Fed is going to cut just a few times or is embarking a longer running rate cutting cycle.

Powell speaks at 10 a.m. ET at the Fed’s annual Jackson Hole, Wyoming, symposium.

An inverted yield curve, if it stays inverted for awhile, is considered a strong recession warning.

“Looks like the Fed is going to be stubborn, and the yield curve is starting to price that in,” noted Andy Brenner of National Alliance.

The Fed, in the minutes of its last meeting, called its first rate cut in more than a decade a “recalibration,” emphasizing it is not on a “pre-set course” for future cuts. The Federal Open Market Committee cut rates by a quarter point on July 31, and following its meeting, Powell called the cut a “midcycle adjustment,” a term also used in the meeting minutes.

“If midcyle adjustment is not in the Jackson Hole speech, people will interpret that as opening the door for more cuts as opposed to two or three,” said Michael Gapen, chief U.S. economist at Barlcays. Since the Fed’s last meeting, bond yields, which move opposite price, have dropped or moved deeper into negative territory.

The U.S. 10-year was at 2.07% ahead of the Fed’s last meeting, and was at 1.58% Wednesday afternoon. The 2-year was at about the same rate, but was fluctuating, having hit a high of 1.58%.


Company: cnbc, Activity: cnbc, Date: 2019-08-21  Authors: patti domm
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Investing in the strange negative yield world — ‘It’s very hard to wrap your arms around’

That doesn’t mean U.S. Treasury yields will also go negative with the other $15 trillion in negative yielding debt. But some strategists say they could, and at the very least Treasurys should continue to see new low rates as European and other negative yields hit new lows. Yields move opposite price, so in an extremely low yield or negative world, investors hope for price appreciation on instruments where they had once looked for yield. “It’s very hard to wrap your arms around the idea of negati


That doesn’t mean U.S. Treasury yields will also go negative with the other $15 trillion in negative yielding debt. But some strategists say they could, and at the very least Treasurys should continue to see new low rates as European and other negative yields hit new lows. Yields move opposite price, so in an extremely low yield or negative world, investors hope for price appreciation on instruments where they had once looked for yield. “It’s very hard to wrap your arms around the idea of negati
Investing in the strange negative yield world — ‘It’s very hard to wrap your arms around’ Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-08-20  Authors: patti domm
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Investing in the strange negative yield world — 'It's very hard to wrap your arms around'

The bond market has entered a financial twilight zone, and at this point, there doesn’t seem to be a smooth way out. For the last several weeks, investors have been watching a swift move lower in global bond yields — with the amount of negative yielding debt increasing to the point where it now equals nearly a third of tradeable bonds worldwide, according to J.P. Morgan. Investors have jumped into the safety of bonds, amid worries the global economy is slowing and that the trade wars will take a bigger toll on growth. Yields are also cascading lower, as global central banks rush to cut interest rates, a factor feeding the downward spiral in yields.

That doesn’t mean U.S. Treasury yields will also go negative with the other $15 trillion in negative yielding debt. But some strategists say they could, and at the very least Treasurys should continue to see new low rates as European and other negative yields hit new lows. Yields move opposite price, so in an extremely low yield or negative world, investors hope for price appreciation on instruments where they had once looked for yield. “It’s very depressing…Just think about it as a saver or investor,” said Michael Schumacher, director rates at Wells Fargo. “It’s very hard to wrap your arms around the idea of negative yields. It doesn’t really sit well…It’s terrible for the financial system. Look how European banks have done for the last six, seven years—very poorly.” As rates drop around the world, the U.S. has become an even more attractive market, for the remaining yield it has and the fact the economy is growing. Contrast that to Germany where its economy is shrinking and the 10-year bund is yielding a negative 0.69%, compared to the U.S. 10-year yield, at 1.54%.

Disorderly and painful

Strategists say the reversal of the bond market trade could be disorderly and painful if it happens quickly. J.P. Morgan strategists point out that four countries — Denmark, Germany, Netherlands and Finland — now have negative yields across their full spectrum of rates. “In our conversations with clients, the experiments of central banks with negative rates are viewed more as a policy mistake rather than stimulus and create a sense of an abnormal and uncertain environment that damages not only banks but also consumer and business confidence,” the J.P. Morgan strategists wrote. The Federal Reserve is expected to cut rates again in September and possibly later, triggering lower interest rates around the world. The differentials between global interest rates is putting pressure on currency moves. “I think the momentum trade is basically saying to the Fed: ‘You’re falling behind the curve.’ The Fed does need to keep up with what’s going on in global markets. The one barometer we have to look at, to make it simple, is the dollar. The stronger the dollar gets, the more negative it is for the global economy,” said Jim Caron, portfolio manager at Morgan Stanley Investment Management. “A lot of the world’s debt is in dollars. The slower the Fed goes, the stronger the dollar gets.” Caron said investors continue to buy bonds for performance, and they are finding it as rates continue to drop. “People are getting socialized to lower yields…It’s bizarre,” said Caron. “It could definitely stay like that for awhile.”

Positioning in the bond market has become so extreme that the rules are being thrown out, and the spiral lower is feeding on itself. U.S. yields are going down as investors that need to hold long term securities move into the long end of the Treasury curve. “I think the main driver right now is basically the lack of foreign yields…Tomorrow, Germany is going to issue a 30-year bond. It’s going to have a zero coupon, but it’s probably going to come at a premium,” said Hans Mikkelsen, head of investment grade corporate strategy at Bank of America Merrill Lynch. “The existing 30-year debt is trading at negative 0.18%.”

‘Self reinforcing’


Company: cnbc, Activity: cnbc, Date: 2019-08-20  Authors: patti domm
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‘Everything seems like a trap now’ — Cramer warns about mixed signals in the stock market

Investors should be careful not to buy or sell stocks based on last week’s brief inversion of the yield curve in the bond market, CNBC’s Jim Cramer warned on Monday. “Everything seems like a trap now,” Cramer said on CNBC’s “Squawk Box.” “It was a trap to sell off the inverted, and now they have to go buy back on the uninverted. Over the weekend, White House trade advisor Peter Navarro played down Wednesday’s inversion, saying technically it was more flat than inverted. Cramer said he hears more


Investors should be careful not to buy or sell stocks based on last week’s brief inversion of the yield curve in the bond market, CNBC’s Jim Cramer warned on Monday. “Everything seems like a trap now,” Cramer said on CNBC’s “Squawk Box.” “It was a trap to sell off the inverted, and now they have to go buy back on the uninverted. Over the weekend, White House trade advisor Peter Navarro played down Wednesday’s inversion, saying technically it was more flat than inverted. Cramer said he hears more
‘Everything seems like a trap now’ — Cramer warns about mixed signals in the stock market Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-08-19  Authors: matthew j belvedere
Keywords: news, cnbc, companies, trade, sell, market, yield, warns, inversion, inverted, mixed, stock, recession, wednesdays, signals, cramer, uninverted, stocks, trap


'Everything seems like a trap now' — Cramer warns about mixed signals in the stock market

Investors should be careful not to buy or sell stocks based on last week’s brief inversion of the yield curve in the bond market, CNBC’s Jim Cramer warned on Monday.

Cramer was skeptical about buying the Dow Jones Industrial Average’s 300-point advance at the open on Wall Street, which was playing out against the backdrop of continuing bond yield stabilization.

“Everything seems like a trap now,” Cramer said on CNBC’s “Squawk Box.” “It was a trap to sell off the inverted, and now they have to go buy back on the uninverted. What happens if we get inverted again?”

Last Wednesday, stocks tanked after the 10-year Treasury yield briefly inverted and dipped below the 2-year for the first time since before the 2008 financial crisis and subsequent Great Recession.

Such a move preceded every recession over the past 50 years.

“The idea that we uninverted the yield curve is something that lasts for, who knows, like an hour,” the “Mad Money” host said, facetiously, arguing against reading too much into the inversion theory.

Over the weekend, White House trade advisor Peter Navarro played down Wednesday’s inversion, saying technically it was more flat than inverted. For a true inversion, he argued, the spread would need to have been much larger. President Donald Trump said he does not see a recession on the horizon.

If the Dow were to hold on to its early gains by Monday’s close, it would erase all of Wednesday’s 800-point sell-off, the worst single-session of the year.

Cramer said he understands why investors might be suspicious of the economy, given the track record of inversions as recession indicators and the concerns about global economic growth due to the U.S.-China trade war.

Cramer said he hears more doom and gloom in the media than he does from companies. “I do feel like things are worse when I listen to people talk, than reality,” he said.


Company: cnbc, Activity: cnbc, Date: 2019-08-19  Authors: matthew j belvedere
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Goldman says buy dividend stocks amid diving yields

Investors have piled into safe-haven Treasurys recently, pushing bond yields to their historic lows last week as stocks sold off. Goldman predicted the S&P 500 annualized dividend growth to be 3.5% during the next decade. Goldman screened stocks with strong dividend growth and high dividend yields, based on their dividend estimates and payout ratios. The average stock in its basket has a dividend yield of 3.8% versus 2.1% for the typical S&P 500 stock. AT&T, Kohl’s and data storage company Seaga


Investors have piled into safe-haven Treasurys recently, pushing bond yields to their historic lows last week as stocks sold off. Goldman predicted the S&P 500 annualized dividend growth to be 3.5% during the next decade. Goldman screened stocks with strong dividend growth and high dividend yields, based on their dividend estimates and payout ratios. The average stock in its basket has a dividend yield of 3.8% versus 2.1% for the typical S&P 500 stock. AT&T, Kohl’s and data storage company Seaga
Goldman says buy dividend stocks amid diving yields Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-08-19  Authors: yun li
Keywords: news, cnbc, companies, 500, yields, amid, dividend, yield, goldman, diving, buy, company, sp, strategist, stocks, growth


Goldman says buy dividend stocks amid diving yields

In a falling rate environment, Goldman Sachs is advising clients to buy high-dividend payers, which it says are trading at their cheapest levels in nearly 40 years relative to stocks with low yields.

“With the 10-year Treasury yield at just 1.5% and the Fed likely to cut two more times this year, investors should look for opportunities in dividend stocks,” Goldman chief U.S. equity strategist David Kostin said in a note Friday.

Investors have piled into safe-haven Treasurys recently, pushing bond yields to their historic lows last week as stocks sold off. If the market remains shaky in the face of a slowing global economy and the intensified trade war, investors may look to stocks with more steady dividend income, according to Goldman.

The market is pricing in “an overly pessimistic” level of dividend payouts with the swap-market prices implying merely 0.7% growth over the next decade, Kostin pointed out. Additionally, the valuation gap between high- and low-dividend-yield stocks is close to the widest it has been in the last 40 years, the strategist said.

However, the reality is that U.S. companies are increasing dividends steadily with the S&P 500 dividends rising by 9% in the first and second quarters this year, he said. Goldman predicted the S&P 500 annualized dividend growth to be 3.5% during the next decade.

Goldman screened stocks with strong dividend growth and high dividend yields, based on their dividend estimates and payout ratios. The average stock in its basket has a dividend yield of 3.8% versus 2.1% for the typical S&P 500 stock.

AT&T, Kohl’s and data storage company Seagate Technology all have a dividend yield of about 6% and make the Goldman list of about 50 stocks. Food processing company Archer-Daniels Midland, Citizens Financials and real estate company Simon Property Group are also among those big dividend growers.


Company: cnbc, Activity: cnbc, Date: 2019-08-19  Authors: yun li
Keywords: news, cnbc, companies, 500, yields, amid, dividend, yield, goldman, diving, buy, company, sp, strategist, stocks, growth


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US Treasury yields climb as recession fears ease

The yield on the 30-year Treasury bond, which hit new all-time lows last week, was also higher at 2.078%. On Saturday, China’s central bank unveiled a key interest rate reform to help drive borrowing costs lower for companies. U.S. central bank officials cut interest rates in July and indicated at the time that they’d be open to future easing if warranted. To be sure, investors see about a 74% chance of a quarter-point rate cut next month. A spell of weaker-than-expected data, agitation in U.S.-


The yield on the 30-year Treasury bond, which hit new all-time lows last week, was also higher at 2.078%. On Saturday, China’s central bank unveiled a key interest rate reform to help drive borrowing costs lower for companies. U.S. central bank officials cut interest rates in July and indicated at the time that they’d be open to future easing if warranted. To be sure, investors see about a 74% chance of a quarter-point rate cut next month. A spell of weaker-than-expected data, agitation in U.S.-
US Treasury yields climb as recession fears ease Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-08-19  Authors: thomas franck
Keywords: news, cnbc, companies, ease, climb, yields, yield, investors, rate, points, central, fears, recession, week, cut, interest, treasury


US Treasury yields climb as recession fears ease

U.S. government debt yields climbed on Monday as a more positive market and economic outlook goaded investors back into riskier assets.

The yield on the benchmark 10-year Treasury note rose 6 basis points to 1.6% while the rate on Treasurys maturing in two years rose 4 basis points to 1.519%. The yield on the 30-year Treasury bond, which hit new all-time lows last week, was also higher at 2.078%.

The spread between the 2-year Treasury yield and that of the 10-year inverted in intraday trading on Wednesday for the first time in over a decade, a sign many consider a reliable recession indicator. That portion of the yield curve steepened on Monday and was last seen positive at 8 basis points.

Market focus is largely attuned to global central banks, as hopes of more stimulus from major economies such as China and Germany soothed investors’ concerns about a global economic downturn.

The Commerce Department was preparing to extend the length of a license that has allowed Huawei to continue business with the U.S. companies to service existing customers despite the White House’s concerns over national security, according to report from the Wall Street Journal and Reuters.

Huawei’s business in the U.S. is one of the most contentious points in the ongoing trade war with China.

On Saturday, China’s central bank unveiled a key interest rate reform to help drive borrowing costs lower for companies.

Meanwhile, market participants are likely to closely monitor the Federal Reserve’s Jackson Hole symposium this week in order to get greater clarity on the future path of interest rates. U.S. central bank officials cut interest rates in July and indicated at the time that they’d be open to future easing if warranted.

To be sure, investors see about a 74% chance of a quarter-point rate cut next month.

A spell of weaker-than-expected data, agitation in U.S.-China trade relations and elevated recession fears sent Treasury yields tumbling to multiyear lows last week. For his part, however, President Donald Trump said Sunday he doesn’t see a recession on the horizon in the U.S. after a volatile week for markets.

“I don’t think we’re having a recession,” Trump told reporters. “We’re doing tremendously well. Our consumers are rich. I gave a tremendous tax cut and they’re loaded up with money.”


Company: cnbc, Activity: cnbc, Date: 2019-08-19  Authors: thomas franck
Keywords: news, cnbc, companies, ease, climb, yields, yield, investors, rate, points, central, fears, recession, week, cut, interest, treasury


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