Huge Divergences in the Economy and the Markets

Highlights 

• Historically, buying at the 5.0% threshold for the 10-year T-note has resulted in healthy returns for bond investors

• Don’t be fooled by “un-inversion” — the 2s/10s curve typically regains a positive slope a few months before recessions begin 

• Expansion in real consumer spending when real personal disposable income has been declining is unsustainable 

• The Fed’s semi-annual Financial Stability Report highlights cracks beneath the surface, even if the overall assessment seems healthy