Some trusted economic gauges are giving out confusing readings
The new year in economics will be a tale of two curves that have mysteriously gone flat—the yield curve and the Phillips curve. Some economists argue that the uncurvy curves are sending a message that the U.S. economy needs more stimulus. The debate is likely to be a prime topic at the Federal Reserve when Jerome Powell takes over as chair in February, assuming the Senate confirms his nomination as expected.
For all the attention they’re getting, though, there might be less to the two flattenings than meets the eye. Skeptics argue that the risk of recession remains low and the possibility inflation will pick up is still high. Says Jim Paulsen, chief investment strategist at Leuthold Group LLC: “I agree they are considered big stories, but I think both are overblown.”
The yield curve is about the price of money. It shows the interest rates an investor can earn on U.S. Treasuries or other bonds of different maturities, with the shortest-term instruments on the left and longest on the right. The yield curve normally tilts upward, since rates tend to be higher for longer-term bonds, because investors demand a better rate as compensation for tying up their money for a longer period of time.
This story is from the January 16, 2018 edition of Bloomberg Businessweek Middle East.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the January 16, 2018 edition of Bloomberg Businessweek Middle East.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber? Sign In
Where's Larry?
While Google faces existential challenges, Larry Page seems to be exercising his right to be forgotten
Has Malta Sold Its Soul?
The European Unions least-populous member nation has become a financial-services hub plagued by allegations of corruption and money laundering. Citizenship is literally for sale. And the rest of the EU is furious
Ageing And Automation
Shrewd policy initiatives will be required to address the twin challenges of ageing and automation in the GCC
Art Basel Is Coming To Save Your City
The art fair claims it can replicate what it did for Miami all around the world.
Emerging Markets Meet Tighter Money
The long era of quantitative easing made investors more willing to put their holdings in riskier places. Suddenly thats over
Where Will A Trade War Take Us?
The damage from Trump’s disruptive policies will take years to repair.
Breaking The Ice
A tanker fleet this big that can travel this far north has never been built before
The Infrastructure Boom That Wasn't
Big money is looking for projects to invest in, but the pace of dealmaking is slow
Looking For A Trade War Defence
The battle over tariffs is starting to get investors’ attention—but where’s the shelter?
The Investigation Trump Can't Shake
The botched Putin summit gives Deputy Attorney General Rosenstein some breathing room