More on RBA Debelle comments on the inverting US yield curve
Reserve Bank of Australia Deputy Governor Guy Debelle spoke earlier:
And added, in the Q&A:
Following up with a little more n=on his yield curve comments:
- The yield going inverted, I'm not sure how much of a signal that is at the moment.
- If I look at the yield curve right around the world, you make a reasonable case that term premia are negative. If I stuck a normal term premium on the end of the U.S. yield curve it would have a nice, not particularly large, but nevertheless an upward slope. The same is true here actually. So I'm just not sure how useful that signal is.
(term premium is the added extra an investor requires for holding longer term bonds against a series of short-term bonds … in a nutshell)
More from deputy Debelle:
- the U.S. economy is actually growing above trend
- they've got a fair way to slow from here
- but nevertheless that is a risk, certainly, and the trade disputes I think are the key risk to that
- It's obviously a risk out there. I'm not sure I'd be relying on the yield curve as the best signal of that risk given the yield curve has not obviously got the same sort of structure that it's had historically.