Fisher Investments on Yield Curves | Capital Market Update

Yield curves are much talked about but often misunderstood. In this video, the Investment Policy Committee explains how and how not to use yield curves as an economic indicator.
Yield curves compare the interest rates of similar bonds with different durations. The yield curve is an important indicator of economic health because it can give you a good sense of banks’ willingness to lend. Lending to qualified consumers and businesses is essential for a healthy and growing economy. Because banks borrow short-term to lend long-term, in our view it is most useful to focus on the 3-month and 10-year yield curve. This comparison gives you the net interest margin which tells you how profitable it is to lend and thus how likely banks will be to issue more loans. If the yield curve inverts it can indicate a slowing economy. But there are several important caveats. First, look at the 3-month vs. 10-year yield curve as that can be how banks borrow and lend. Other comparisons are less meaningful in our view. Second, for a yield curve inversion to be significant, it must last for a while and be widespread. Short-term yield curve inversions don’t tell you much. And since global banks can borrow in one country and lend in another, focus on the global GDP weighted yield curve, not on the yield curve in just one country. Lastly, if you get out of the stock market when the yield curve flattens, you might miss out on important bull market gains.

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Видео Fisher Investments on Yield Curves | Capital Market Update канала Fisher Investments