After the investors were indebted in a heavy lump sum to the Federal Reserve of the US, the decision was taken that lead into the auction of the Treasury of 131 billion dollars for redeeming that too at their lowest yields. This is a fresh sign indicating the weakening of global economic growth.
This week kick-started with the graphs that indicated the recession in the yielding curve of the United States. The curve denoted a gap between 3 months and 10 years which has gone down into the negative zone. The flip in the economic curve had already begun as early as 2006 and the results of the downturn started to appear in the year 2007. While the manufacturing index of the US dropped it the curve started indicating weakness in the economic collapse of Germany and France.
The investors might be able to measure the steps taken by the Fed due to the revelation in the housing of the US market and the confidence of the consumers. Further discussions will be weighed on the vote for Brexit in the Parliament of the U.K.
The investors are doubting on the Fed’s actions and commentaries that the Fed knows something really crucial about the future economic conditions, which has been kept a secret to the rest of the world. The auction that is about to take place is a trade that will certainly result in some agitation which is forcing the conversation about the economic recession to elevate.
The head of fixed income at Raymond James, Kevin Giddis of Memphis, Tennessee focuses on the data related to the housing starts that shows signs of a faltering economy. While the policymakers are expecting a hike by 2020, the investors are increasing the stakes of their bets.
At Morgan Investment Management, Michael Kushma is the chief investment officer for the fixed incomes globally stated that the increase in the supply of the bills is resulting in an increase in rates in short-ends. He also noted that the curve of the economy of the US is being distorted due to forces invigorating the demands globally.
Although the investors will get a chance to deliver their views on the decisions made by Fed reports to rattle down the balance sheets, the 2-year, 5-year, and 7-year maturity policies will not be affected by the degrading yielding value, globally.
The auctions will reveal the commitment of the investors to the Treasury and will also indicate the area of the curve that is most demanded by them to put their money in.