Axios: “Unambiguous Signal” Wall Street Investors Expect a Recession

Welcome

New York Stock Exchange, Wall street, Manhattan, New York, USA

Those “inverted” Treasury-bond yield curves are back in the headlines again, and investors are more worried than ever about the R-word: recession.

Tuesday’s market action provided an unambiguous signal that investors are expecting a recession,” Axios reported on Wednesday, adding that the “Treasury yield curve completely inverted” with short-term bills paying higher interest rates than 30-year bonds.

What’s behind all this? President Trump’s trade war with China.

Despite Trump’s often-expressed optimism about the U.S. economy, many on Wall Street are growing more concerned that his tariffs, and China’s determination to fight back, mean a long conflict, damaging to both sides.

As a result, Axios says, those investors “are buying up safe-haven U.S. government debt to take cover.”

In other words, they’re buying more longer-term bonds, which pushes prices up, and returns down.

Yields on the benchmark 10-year Treasury note are now just above their lowest levels in history, while for the first time since the depths of the last recession in 2009, “the S&P 500’s dividend offered a higher yield than 30-year Treasury bonds,” Axios says.