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What the Yield Curve Inversion is Signaling to Us

Marco Fragnito | Robert Fragnito

Friday’s market sell-off spurred on by an inversion in the yield curve has resulted in a barrage of commentary in the last few days. The significance of this signal is in its ability to forecast recessions. It is important for investors to remember the inversion must persist for months—not days—before it can be viewed as a reliable indicator. 

We at MCF Capital Management felt the Federal Reserve was too tight in its monetary policy and expect the Fed to cut rates as early as the 3rd quarter of this year (See our Market Outlook 2019). With futures markets starting to price in an interest rate cut as early as September, we remain bullish on equity markets.

If you have any questions please contact us directly at 949.472.4579, and feel free to forward this report and our contact information to anyone who might be interested.

DISCLAIMER

The opinions expressed here reflect the judgement of the author(s) as of this date and are subject to change without notice. Information presented here is for informational purposes only and does not intend to make an offer, solicitation, or recommendation for the sale or purchase of any product, security, or investment strategy. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed here. The information being provided is strictly as a courtesy.