And that's because:
"Allow me to introduce a radical concept in economics: “supply and demand” !"
"The long-term borrowing rate for return on investment dropped momentarily lower than the short-term borrowing rate of return on investment because massive numbers of foreign investors were rushing to buy long-term U.S. bonds. Wait… what? Yes, a ‘negative yield curve’ is what happens when everyone wants to buy bonds in your long-term economy."
"There weren’t enough long-term bonds to fill the demand of those who wanted to purchase them. Ergo, the return rate of interest dropped because there was no need to have an incentive to sell them…. everyone wants them."
"So the yield drops, because the U.S. doesn’t need to incentivize the sale… because everyone is lined up to buy them. See how that works?"
"Do lines of people wrapping all around the world trying to get to the U.S.A Bank and buy U.S. treasury bonds sound like the USA economy (underlying the bond) is weak or in trouble?"
"It’s OK to laugh out loud."
As they say, read the whole thing.
On the surface that is what it seems, but one of the main drivers is a large contingent of those buyers are doing so because they are fleeing other investments - that is what MAY be signaling recession (since it has before). But fear mongering and just plain crowd psychosis is part of the reaction for sure.
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