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Trouble With the (Inverted) Curve

Mar.22 -- The Treasury yield curve inverted for the first time since the last crisis Friday, triggering the first reliable market signal of an impending recession and rate-cutting cycle. The gap between the 3-month and 10-year yields vanished as a surge of buying pushed the latter to a 14-month low. Inversion is considered a reliable harbinger of recession in the U.S., within roughly the next 18 months. Traders took that dovish shift as their cue to dig into positions for a Fed easing cycle, pricing in a cut by the end of 2020 and a one-in-two chance of a reduction as soon as this year. Aberdeen’s Luke Hickmore, HSBC’s Jose Rasco and Loomis Sayles‘ Matt Eagan sit down with Bloomberg’s Jonathan Ferro to discuss what the inverted yield curve could mean for markets and the global economy.

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