Happy May Day! Despite the defensive posture the title of this post evokes, I am bullish on the US economy. And as a result, I am not bearish on risk assets, despite the flattening yield curve. I believe recession is not imminent. And as such, we have ample time to prepare our portfolios for an eventual bear market. Let me explain below.
The basics of the Treasury curve
I started talking about this yield curve flattening - where the premium investors receive for holding longer maturity Treasury bonds decreases - about six months ago. The gist of that post was that people were overly concerned about curve flattening. I am more concerned now at a 2-10 year Treasury spread of 45 basis points than I was at a 70 basis point spread in November. But the big takeaway from that post still holds: fl...
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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.