The US yield curve continues to flatten further amid trade tensions
It's fallen by a good 7 bps since the start of last week to now being 35 bps, as the downtrend continues and we're very much on our way towards an inverted yield curve still. With all the trade rhetoric between US and China going on, this is one thing to also keep your eye on.
The Fed has continuously brushed aside the flattening yield curve throughout the year, and even if they don't believe that the flattening this time around is the same as what happened back in 2007 you can bet your money that they are not 100% confident on that.
An inverted yield curve has been an accurate precursor for a recession in the past, so if the Fed wants to carry on with their rate hikes and tightening monetary policy, they would have to come up with some solid reasons to convince the market that they're not going to set off the next global crisis.
