Flattened yield curve reason to be nervous, but U.S. economy solid: Fed’s Evans

Chicago Federal Reserve Bank President Charles Evans said on Monday it was understandable for markets to be nervous when the yield curve flattened, though he was still confident about the U.S. economic growth outlook.

In what many see as a bad omen for the economy, yields on benchmark U.S. 10-year treasury notes fell below three-month rates on Friday for the first time since mid-2007, an inversion that has in the past signaled the risk of recession.

After an unexpected rise in the Ifo Institute’s March business climate index in Germany, spreads between U.S. three-month and 10-year Treasury yields turned positive.

Evans described the inversion as “pretty narrow”.

“We have to take into account that there’s been a secular decline in long-term interest rates,” Evans said in comments at the Credit Suisse Asian Investment Conference in Hong Kong, days after the Fed signaled an end to its tightening and abandoned plans for further rate hikes in 2019..

“Some of this is structural, having to do with lower trend growth, lower real interest rates,” he said. “I think, in that environment, it’s probably more natural that yield curves are somewhat flatter than they have been historically.”

On the sidelines of the conference, Evans told CNBC in an interview that he could understand why investors were more “watchful, waiting and looking,” adding the Fed was doing the same. But, he added, economic fundamentals were “good” and he expected growth to be around 2 percent this year.

“Your first reaction is gonna (be) ‘wow, this is less than what we had’ and I think this is missing the message.”

The risk of a shock hitting the economy was not unusually higher or lower at the moment, he later told reporters.

Speaking at the same event, former Fed chair Janet Yellen said the yield curve may signal the need to cut interest rates at some point, but it does not signal a recession.

“In contrast with times past, there’s a tendency now for the yield curve to be very flat,” Yellen, who led the Fed between 2014 and 2018, said.

TIME TO PAUSE

On the monetary policy outlook, Evans told the conference it was a good time for the U.S. central bank to pause and adopt a cautious stance, adding he did not expect any interest rate hikes until the second half of next year.

He said the labor market remained strong, but noted inflation expectations had edged lower and there were risks related to weaker economic activity in China and elsewhere, uncertainty over Brexit, and a waning impact of U.S. fiscal stimulus.

Softening his tone from a few months ago, Evans, who votes on interest rate policy this year, said monetary policy was neither accommodative, nor restrictive at this point.

“I see things impeding inflation a bit, and I want to see inflation get up. So my own path is not to expect a funds rate increase until next year, probably, the second half,” Evans said.

And even if prices do start to rise, he said, “given how muted inflationary pressures appear today, a rise to 2.25 to 2.5 percent is not a big concern to me at the moment.”

That assessment suggests Evans has set the bar fairly high for further rate hikes, considering that inflation by the Fed’s preferred gauge has not been that much above the Fed’s 2-percent goal since before the financial crisis.

He added that with downside risks looming and uncertainties rife, it is prudent for the Fed to wait for more economic data.

He also said a rate cut was a possibility if the economy softened even more or inflation ran too low.

That echoed the view of fellow policymaker Atlanta Fed President Raphael Bostic, who on Friday said both possibilities are on the table for him.

In January, Evans said the Fed could hike interest rates three times in 2019 assuming the U.S. economy remained reasonably strong.

Last week, the U.S. central bank left rates steady in a range of 2.25 percent to 2.5 percent. Fresh forecasts showed 11 of 17 Fed policymakers expected no rate change for the rest of the year, up from just two in December.

That unexpectedly dovish signal had financial markets quickly pricing in a rate cut next year.

resource: https://www.reuters.com/article/us-usa-fed-evans-rates/flattened-yield-curve-reason-to-be-nervous-but-us-economy-solid-feds-evans-idUSKCN1R604R

53 Thoughts to “Flattened yield curve reason to be nervous, but U.S. economy solid: Fed’s Evans”

  1. azhydroxychloroquine.com

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  2. cialis 20mg

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  3. cialistodo.com

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  4. cephalexin without a doctor prescription

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  5. vidalista 80mg black india

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  6. cialis at walmart

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  7. hydroxychloroquine use in florida

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  8. tadalafil 5mg coupon

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  9. world’s strongest sleeping pill

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  10. cialis interaction with amlodipine

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  11. acyclovir dosage fever blister

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  12. trump’s investment in hydroxychloroquine

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  13. eating before taking ivermectin

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  14. how many countries are using hydroxychloroquine

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  15. best natural cefixime alternative

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  16. hydroxychloroquine success rate

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  17. ivermectin without a doctor prescription not scam

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  18. vidalista generic

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  19. can aurogra treat bph

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  20. buy cialis online

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  21. cialis cost

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  22. cialis without a doctors approval

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  23. z pack for sale

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  24. cialis prescription prices

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  25. hydroxychloroquine coronavirus

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  26. erectile dysfunction pills buy

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  27. tadalafil without doctor prescription

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  28. buy stromectol pills

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  29. sildenafil interaction with metoprolol

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  30. generic viagra without a doctor

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  31. tadalafil without a doctor prescription usa

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  32. ed meds online without doctor

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  33. viagra before after pics

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  34. cialis dose 40 mg

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  35. best way to take sildenafil 100mg

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  36. no prescription tadalafil online

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  37. hydroxychloroquine clinical trials results

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  38. tadalafil softgel capsule 20mg

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  39. hydroxychloroquine & azithromycin success

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  40. cephalexin 250 mg for humans

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  41. hydroxychloroquine 200 mg for sale

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  42. generic dapoxetine in stores

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  43. 200mg viagra experience

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  44. ofloxacin vs erythromycin eye

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  45. cost of tadalafil 20 mg

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  46. tadalafil australia buy

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  47. hydroxychloroquine side effects list

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  48. tadalafil 20mg price in usa

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  49. dapoxetine brand name us

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  50. uses for hydroxychloroquine

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  51. cortisone injection vs oral prednisone

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  52. how long after taking metronidazole

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

  53. cialis street price

    Flattened yield curve reason to be nervous, but U.S. economy solid: Fed's Evans – UIA Financial

Comments are closed.