A macro hedge fund says investors should monitor the growing number of yield curve inversions in the U.S. Treasurys market
Stock investors should heed the warning emanating from the bond market, says at least one hedge-fund manager, as the yield curve staged a stunning inversion Friday.
In particular, Costa said the growing number of inversions in yield spreads across Treasury maturities suggested a bear-market for equities was at hand, in the face of a darkening global growth picture. The inversion is the first such since 2007, just before the financial crisis that unfolded, reaching a crescendo in the fall of 2008. Yield curves invert because investors worry about future economic growth, which can stoke demand for safe, long-term Treasurys, while pushing down long-term rates.
By measuring the number of inversions across instead of a single spread, the broader gauge would be less affected by individual idiosyncrasies that could muddy the economic signal of the bond-market recession indicator.
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