Called a"yield curve inversion," this has been a traditional warning sign for the economy: If smart investors see more risk two years ahead than 10 years down the road, it can't be good for near-term growth.In response, President Donald Trump and others have upped demands for a U.S. Federal Reserve rate cut.Policymakers have been trying to get a handle on the issue for a while, with no consensus on whether a curve inversion today means the same thing it did in the past.
Graphic: Fed's Bullard was an early worrier about the Treasury yield curve - https://fingfx.thomsonreuters.com/gfx/mkt/12/4812/4769/Pastedper cent20Image.jpg Sept. 6, 2018: “I don’t see the flat yield curve or inverted yield curve as being the deciding factor in terms of where we should go with policy.” - New York Fed President John Williams
Sept. 12, 2018: Lower overall rates and changing investor behavior"may temper somewhat the conclusions that we can draw from historical yield curve relationships." - Fed Governor Lael Brainard.Graphic: Fed's Brainard among those seeing yield curve as less meaningful - https://fingfx.thomsonreuters.com/gfx/mkt/12/4815/4772/Pastedper cent20Image.jpg
Graphic: Fed's Evans, Rosengren and Daly unperturbed by yield curve - https://fingfx.thomsonreuters.com/gfx/mkt/12/4816/4773/Pastedper cent20Image.jpg