|Stephen Gandel – Bloomberg Gadfly
Bond Investors Are Stock Investors’ Latest Concern
Summary: A flattening yield curve has historically been a recessionary signal. Recently, the yield curve has flattened more than expected. While the bond market is signalling an economic slowdown, the equity markets are hitting new highs. The disconnect is concerning, but many analysts are pointing towards central banks as the culprits. Excessive bond purchases may be distorting the yield curve in a way that affects the bond markets without having a negative effect on equity markets.