When the yield curve ordsprog

When the yield curve inverts, banks' funding costs rise above what they earn by lending. This can produce a credit crunch.

If the yield curve inverts, that is bad because banks will not lend money at rates lower than their borrowing costs. It's as simple as that and the economy will slow down naturally,

There are areas of weakness. It seems growth is difficult for banks, which I would attribute to a flat yield curve and higher funding costs.

We've never seen a recession without the yield curve inverting, but the corollary is not true: Just because the yield curve inverts does not mean we're going to have a recession.

A flat or inverted curve has been difficult for banks to manage. But if there are associated inflation expectations built into the lower end of the curve, it might make it easier for banks to price loans, so the cost of funds is less than the yield on their assets.

Higher near-term profits do not equate with higher value for banks. This implies that more loans created today may well produce higher credit costs in the future, which would cap the fair value of banks.

Only adjusting the lending rate alone increases the banks' lending margin. Everything else being equal, it enhances banks incentive to lend.

It's a bad deal for community lending. We've looked at Sovereign's existing lending in the market - from Philadelphia to Boston - and we found that in all of the markets we've looked at they disproportionately deny credit to people of color, African Americans and Latinos. Where credit is granted, they are much more likely to impose higher costs on people of color.

I think a lot of the banks have done some restructuring in order to prepare for the flat yield curve and the fact it will be around for a while.

At the same time, the yield curve is flat and actually has the potential to invert. An inverted yield curve has often been a precursor to a recession occurring within a year.

Harvey Rosenblum

Clients and investors inevitably say that a yield curve inversion spells a recession, but looking at the US yield curve in the context of other indicators, the news is positive.

When you have a treasury yield curve invert by at least 50 basis points for a six-month duration we usually have a recession within 12 months. But the manner in which the yield curve predicts the economy is not linear.

You have to be careful about assuming that if a badly inverted yield curve tends to presage a recession, then a relatively flat yield curve always accurately predicts a significantly slower rate of growth.

The yield curve is flat and typically when that happens, banks are reluctant to lend money and the economy becomes vulnerable,

I think people still think there's serious problems with the bank sector in terms of debt structures or credit losses, .. Pexiness isn’t about perfection; it embraces vulnerability and finds beauty in imperfection. . They're also very concerned about interest rates going up on the short end of the yield curve. Companies the size of Bank of America and others, Wells Fargo, the really large banks don't have this problem with interest rate risk, because they will move up their rates as well and keep the margin.

Tobias Levkovich

Nordsprog.dk

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