News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.



Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events


Economic Calendar

Economic Calendar Events

Free Trading Guides
Please try again
Oil - US Crude
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
More View more
Real Time News
  • The non-farm payroll (NFP) figure is a key economic indicator for the United States economy. It is also referred to as the monthly market mover. Find out why it has been given this nickname here:
  • Looking for a new way to trade reversals? One of the most used reversal candle patterns is known as the Harami. Like most candlestick formation patterns, the Harami tells a story about sentiment in the market. Get better with trading reversals here:
  • It’s important for traders to be familiar with FX spreads as they are the primary cost of trading currencies. Understand a pair's spread here:
  • The British Pound is giving back some of its multi-month gains with some pairs testing notable support despite a positive fundamental backdrop. Get your market update from @nickcawley1 here:
  • Dealing with the fear of missing out – or FOMO – is a highly valuable skill for traders. Not only can FOMO have a negative emotional impact, it can cloud judgment and overshadow logic. Learn how you can control FOMO in your trading here:
  • Gold is facing the neckline of a Double Bottom Pattern after bouncing off a confirmed longer-term trendline. Is a bullish reversal in order? Get your market update from @FxWestwater here:
  • Central banks often deem it necessary to intervene in the foreign exchange market to protect the value of their national currency. Learn how central bank intervention can impact your trading here:
  • Rollover is the interest paid or earned for holding a currency spot position overnight. Learn how to earn rollover interest on your open positions here:
  • The New Zealand Dollar is in a tricky spot. On one hand, rising stocks can propel NZD. On the other, a dovish RBNZ ahead could cool bond yields as the government tackles soaring housing costs. Get your market update from @ddubrovskyFX here:
  • Knowing how to accurately value a stock enables traders to identify and take advantage of opportunities in the stock market. Find out the difference between a stock's market and intrinsic value, and the importance of the two here:
A Key Yield Curve Inverted, But Should Investors Worry?

A Key Yield Curve Inverted, But Should Investors Worry?

Nancy Pakbaz, CFA, Markets Writer

Bond Market Yield Curve Key Takeaways:

  • Yield curve inversion has investors wondering whether a recession is around the corner. However, inflation may show that their fears are unfounded.
  • A negative 3-month and 10-year treasury spread confirms the market is looking at a flat curve yield, the first since 2008.
  • A narrower high yield and investment grade bond spread may indicate that it is too soon for investors to panic as a key yield benchmark has shown a steady decline.

The inverted 3-month and 10-year US sovereign yield curve has many worried about whether a recession is close by since the last time this happened was in 2008.

The Economy Is Not in the Same Place as it was in 2008

A yield curve inversion tends to occur when there is an economic slowdown and lenders are willing to earn a lower interest rate due to the prediction that the Fed will cut short-term interest rates.

First Yield Curve Inversion on 3-Month and 10-Year Treasury Since 2008

Yield curve inverting

Source: Bloomberg

There have been many debates about the direction of the current economy by different analysts. However, it is important to note that the situation today is different than what it was due to enhanced central bank intervention in capital markets post 2008.

Inflation Remains Close to the Fed’s 2% Target

The current economy does not seem to be in the same position as it was before the 2008 recession. Inflation, for the most part, is not too high and currently rests at 1.7%, not far from the forecasted rate of 1.8% and the target rate of 2%.

Actual Inflation Is 1.7%, Close to the 2% Target

Inflation rate

Source: Bloomberg

When looking at the graph above during the 2008 recession, we notice that the inflation spiked at around 5.6%, a lot higher than the 2% target.

When evaluating whether a market is close to recession, the inflation rate is one of many factors to consider. One of the signals is uncontrollable inflation, which results from an excess supply of money circulating around. Given that the Fed has stated that they will refrain from reducing their balance sheet (i.e., allowing more bonds to remain in the market), this may indicate that a recession is not present in the near future.

High Yield and Investment Grade Bond Spread Seems to Show No Imminent Recession Threat

High yield bonds represent corporate bonds that carry higher risks due to their higher risk of default whereas investment grade bonds are lower risk investments, which tend to have a credit rating of BBB- or higher according to Standard & Poor.

Spreads Continue to Narrow

High yield and investment grade bond

Source: Bloomberg

In the graph above, we notice the spread between high yield bonds and investment grade bonds have been trending lower.

The lower trending spread indicates that these higher risk bonds have investors feeling as though there is a lower probability of default. Hence, why the spread narrowed since the beginning to the year.

If the economy were headed towards a recession, the spread between these two investments would widen out of fear that corporations would default on their debt obligations. However, this does not seem to be the case.Therefore, this is another one of many factors that could signal that it may be too soon for investors to fear the market.

--- Written by Nancy Pakbaz, CFA, DailyFX Research

Follow Nancy on Twitter @NancyPakbazFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.