Interest Rates & the Economy

Do you know which factors influence bond yields and why the gap between short- and long-term yields is often viewed as an economic indicator?

This Week, Craig Siminski of CMS Retirement Income Planning, shares an article that sheds light on this often difficult-to-understand subject:

The yield curve is a graph with the rates of U.S. Treasury bonds plotted by maturity. The slope of the curve is the difference between short-dated bonds and long-dated bonds.

Normally, it curves upward as investors demand higher yields to compensate for the risk of lending money over a longer period. The curve flattens, however, when the rates converge.

Investors pay attention to the yield curve to identify buying opportunities in the bond market and because it has a history of forecasting economic growth. A flat yield curve suggests that inflation and interest rates are expected to stay low for an extended period of time, signaling economic weakness. A steep curve indicates stronger growth ahead.

In the first week of December 2018, the difference between 10-year and two-year Treasury yields — an indicator that tends to be closely watched by investors — was the narrowest since 2007, though still positive.

The flattening yield curve was partly to blame for a year-end spike in stock market volatility, because some economists and investors took it as a warning that…

To Read the Entire Article, Please Click Here.

Craig Siminski is a CERTIFIED FINANCIAL PLANNER™ professional, with more than 21 years of experience. His goal is to provide families, business owners, and their employees with assistance in building their financial freedom.

Please let Craig know that the Green Bay News Network Sent You!

 

CMS Retirement Income Planning

Craig Siminski is a Retirement Income Planner professional with over sixteen years of experience. His goal is to help ensure his clients will have enough income to maintain their dignity and independence in retirement.

Craig is committed to designing and implementing financial strategies that focus on his clients’ needs.  He seeks to be a lifetime resource for each and every client.

Give him a call at 920-569-8363 or email him at [email protected] and tell him the Green Bay News Network sent you!