I’m Fine. This Time is Different.

Have you ever had someone say to you, “I’m fine” and not really believe that was the case?  If we were in a room, you’d see my hand go up.  You can often tell by the person’s tone or look that it may not be true. 

Forgetting an anniversary might lead to an “I’m fine” response.  Speaking of an anniversary, did you forget the two-year anniversary of the inverted yield curve?  If so, it really is fine because Atlas remembered for you. Two years ago last Friday, the interest rate for a ten-year treasury bond fell below that of a two-year note.  Typically, an inverted yield curve of this sort is a harbinger of bad things to come for an economy.  This time around, however, the current economic expansion continues.  Most economic observers are hoping this is just a phase, one which will resolve itself without an economic downturn.

A resolution of this sort would mean some other typically troubling words come to the forefront: this time is different.  It is a term which implies historical patterns and lessons do not apply to current circumstances.  Could this possibly be true?  Of course, it is possible, but don’t ask Atlas to assign probabilities to that being the case.  An inverted yield curve does not seem like the type of development which will become part of some sort of new normal in a growing economy.

In the grand scheme of things, missing an anniversary is a faux pas, but missing the signs of an inverted yield curve could be a costly oversight.  So, let's raise a glass to the inverted yield curve, the unwelcome guest at the economic party, and hope that, unlike a forgotten anniversary, it doesn't lead to long-term heartache. Here's to remembering the important dates, both in love and in finance, and to the hope that next year, we'll be celebrating a return to upward slopes and remembered anniversaries. Cheers!