Yield-Curve Inversion, Inflation, Fed: 3-Minute MLIV

The video discusses the potential for further yield curve inversion, with Bank of America predicting a shift to -85 basis points. The speaker anticipates more inversion, drawing parallels to the 70s and 80s stagflation. The Fed's need to hike rates into a recession to control inflation is highlighted. Market confusion is noted, with differing views on future treasury yields and CPI predictions. The volatility is expected to remain high due to data dependency, and the challenges of interpreting real versus nominal data in an inflationary environment are discussed.

What is the potential yield curve inversion suggested by Bank of America?

• -100 basis points

• -50 basis points

• -65 basis points

• -85 basis points

Why does the speaker advise caution in making big directional trades ahead of the US CPI release?

• The market is too stable.

• The CPI data is irrelevant.

• The curve is expected to flatten.

• There is a high risk of volatility.

What historical period is compared to the current economic situation regarding yield curve inversion?

• The 1990s

• The 2000s

• The 60s

• The 70s and 80s

What is the expected behavior of the two-year and ten-year yields according to the speaker?

• The ten-year will rise, and the two-year will remain anchored.

• Both will remain stable.

• The two-year will rise, and the ten-year will remain anchored.

• Both will decrease significantly.

What is the main challenge in interpreting economic data in an inflationary environment?

• Confusion between real and nominal readings

• Stable market conditions

• Lack of data

• Too much forward guidance