I initially posted this on the r/finance sub, but it seems to have been removed, with no explanation.
But regardless -
I am invested in a mortgage REIT and I noticed that the 5 year interest rate is at 2.77% while the 30yr interest rate is at 3.08%.
That means the spread is .31% and is pretty much the narrowest the spread has been in a very long time. For reference, back in mid to late 2014 the spread was over 2%.
This is not just happening to the 30-5 spread, but the 10-2 spread as well, now down to .43%. For reference, back in mid to late 2014 it was over 2.4%.
Given the spread difference - just two more rate hikes from the Fed and we'll have inverted yields. Are they even paying attention to this?
Any way to hedge against an inverted yield curve? Or security to invest in?
Inverted yield curves are also a typical precursor to a recession.
Also, any theories on what is keeping long term debt rates artificially low considering the amount of debt the US gov has and the massive deficit that we are now running under Trump (future high inflation)? All those things should have made long term debt rates go up proportionally to short term debt. I get why short term debt rates are going up, cause of the deficit spending and the Fed rate hikes.
Submitted June 09, 2018 at 11:13AM by LettersFromTheSky https://ift.tt/2y6Z0Vl
