Accessibility Statement Skip Navigation
  • Why PRWeb
  • How It Works
  • Who Uses It
  • Pricing
  • Login
  • GDPR
  • Create a Free Account
Return to PRWeb homepage
  • News
  • Resources
  • Contact
When typing in this field, a list of search results will appear and be automatically updated as you type.

Searching for your content...

No results found. Please change your search terms and try again.
  • News in Focus
      • Browse News Releases

      • All News Releases
      • Multimedia Gallery

      • All Multimedia
      • All Photos
      • All Videos
  • Business & Money
      • Auto & Transportation

      • Aerospace, Defense
      • Air Freight
      • Airlines & Aviation
      • Automotive
      • Maritime & Shipbuilding
      • Railroads and Intermodal Transportation
      • Supply Chain/Logistics
      • Transportation, Trucking & Railroad
      • Travel
      • Trucking and Road Transportation
      • View All Auto & Transportation

      • Business Technology

      • Blockchain
      • Broadcast Tech
      • Computer & Electronics
      • Computer Hardware
      • Computer Software
      • Data Analytics
      • Electronic Commerce
      • Electronic Components
      • Electronic Design Automation
      • Financial Technology
      • High Tech Security
      • Internet Technology
      • Nanotechnology
      • Networks
      • Peripherals
      • Semiconductors
      • View All Business Technology

      • Entertain­ment & Media

      • Advertising
      • Art
      • Books
      • Entertainment
      • Film and Motion Picture
      • Magazines
      • Music
      • Publishing & Information Services
      • Radio & Podcast
      • Television
      • View All Entertain­ment & Media

      • Financial Services & Investing

      • Accounting News & Issues
      • Acquisitions, Mergers and Takeovers
      • Banking & Financial Services
      • Bankruptcy
      • Bond & Stock Ratings
      • Conference Call Announcements
      • Contracts
      • Cryptocurrency
      • Dividends
      • Earnings
      • Earnings Forecasts & Projections
      • Financing Agreements
      • Insurance
      • Investments Opinions
      • Joint Ventures
      • Mutual Funds
      • Private Placement
      • Real Estate
      • Restructuring & Recapitalization
      • Sales Reports
      • Shareholder Activism
      • Shareholder Meetings
      • Stock Offering
      • Stock Split
      • Venture Capital
      • View All Financial Services & Investing

      • General Business

      • Awards
      • Commercial Real Estate
      • Corporate Expansion
      • Earnings
      • Environmental, Social and Governance (ESG)
      • Human Resource & Workforce Management
      • Licensing
      • New Products & Services
      • Obituaries
      • Outsourcing Businesses
      • Overseas Real Estate (non-US)
      • Personnel Announcements
      • Real Estate Transactions
      • Residential Real Estate
      • Small Business Services
      • Socially Responsible Investing
      • Surveys, Polls and Research
      • Trade Show News
      • View All General Business

  • Science & Tech
      • Consumer Technology

      • Artificial Intelligence
      • Blockchain
      • Cloud Computing/Internet of Things
      • Computer Electronics
      • Computer Hardware
      • Computer Software
      • Consumer Electronics
      • Cryptocurrency
      • Data Analytics
      • Electronic Commerce
      • Electronic Gaming
      • Financial Technology
      • Mobile Entertainment
      • Multimedia & Internet
      • Peripherals
      • Social Media
      • STEM (Science, Tech, Engineering, Math)
      • Supply Chain/Logistics
      • Wireless Communications
      • View All Consumer Technology

      • Energy & Natural Resources

      • Alternative Energies
      • Chemical
      • Electrical Utilities
      • Gas
      • General Manufacturing
      • Mining
      • Mining & Metals
      • Oil & Energy
      • Oil and Gas Discoveries
      • Utilities
      • Water Utilities
      • View All Energy & Natural Resources

      • Environ­ment

      • Conservation & Recycling
      • Environmental Issues
      • Environmental Policy
      • Environmental Products & Services
      • Green Technology
      • Natural Disasters
      • View All Environ­ment

      • Heavy Industry & Manufacturing

      • Aerospace & Defense
      • Agriculture
      • Chemical
      • Construction & Building
      • General Manufacturing
      • HVAC (Heating, Ventilation and Air-Conditioning)
      • Machinery
      • Machine Tools, Metalworking and Metallurgy
      • Mining
      • Mining & Metals
      • Paper, Forest Products & Containers
      • Precious Metals
      • Textiles
      • Tobacco
      • View All Heavy Industry & Manufacturing

      • Telecomm­unications

      • Carriers and Services
      • Mobile Entertainment
      • Networks
      • Peripherals
      • Telecommunications Equipment
      • Telecommunications Industry
      • VoIP (Voice over Internet Protocol)
      • Wireless Communications
      • View All Telecomm­unications

  • Lifestyle & Health
      • Consumer Products & Retail

      • Animals & Pets
      • Beers, Wines and Spirits
      • Beverages
      • Bridal Services
      • Cannabis
      • Cosmetics and Personal Care
      • Fashion
      • Food & Beverages
      • Furniture and Furnishings
      • Home Improvement
      • Household, Consumer & Cosmetics
      • Household Products
      • Jewelry
      • Non-Alcoholic Beverages
      • Office Products
      • Organic Food
      • Product Recalls
      • Restaurants
      • Retail
      • Supermarkets
      • Toys
      • View All Consumer Products & Retail

      • Entertain­ment & Media

      • Advertising
      • Art
      • Books
      • Entertainment
      • Film and Motion Picture
      • Magazines
      • Music
      • Publishing & Information Services
      • Radio & Podcast
      • Television
      • View All Entertain­ment & Media

      • Health

      • Biometrics
      • Biotechnology
      • Clinical Trials & Medical Discoveries
      • Dentistry
      • FDA Approval
      • Fitness/Wellness
      • Health Care & Hospitals
      • Health Insurance
      • Infection Control
      • International Medical Approval
      • Medical Equipment
      • Medical Pharmaceuticals
      • Mental Health
      • Pharmaceuticals
      • Supplementary Medicine
      • View All Health

      • Sports

      • General Sports
      • Outdoors, Camping & Hiking
      • Sporting Events
      • Sports Equipment & Accessories
      • View All Sports

      • Travel

      • Amusement Parks and Tourist Attractions
      • Gambling & Casinos
      • Hotels and Resorts
      • Leisure & Tourism
      • Outdoors, Camping & Hiking
      • Passenger Aviation
      • Travel Industry
      • View All Travel

  • Policy & Public Interest
      • Policy & Public Interest

      • Advocacy Group Opinion
      • Animal Welfare
      • Congressional & Presidential Campaigns
      • Corporate Social Responsibility
      • Domestic Policy
      • Economic News, Trends, Analysis
      • Education
      • Environmental
      • European Government
      • FDA Approval
      • Federal and State Legislation
      • Federal Executive Branch & Agency
      • Foreign Policy & International Affairs
      • Homeland Security
      • Labor & Union
      • Legal Issues
      • Natural Disasters
      • Not For Profit
      • Patent Law
      • Public Safety
      • Trade Policy
      • U.S. State Policy
      • View All Policy & Public Interest

  • People & Culture
      • People & Culture

      • Aboriginal, First Nations & Native American
      • African American
      • Asian American
      • Children
      • Diversity, Equity & Inclusion
      • Hispanic
      • Lesbian, Gay & Bisexual
      • Men's Interest
      • People with Disabilities
      • Religion
      • Senior Citizens
      • Veterans
      • Women
      • View All People & Culture

  • Hamburger menu
  • Cision PRWeb provides efficient communication tools to continuously engage with target audiences across multiple online channels
  • Create a Free Account
    • ALL CONTACT INFO
    • Contact Us


      11AM ET Sunday – 8PM ET Friday

  • Send a Release
  • Sign up
  • Log in
  • Resources
  • RSS
  • GDPR
  • News in Focus
    • Browse All News
    • Multimedia Gallery
  • Business & Money
    • Auto & Transportation
    • Business Technology
    • Entertain­ment & Media
    • Financial Services & Investing
    • General Business
  • Science & Tech
    • Consumer Technology
    • Energy & Natural Resources
    • Environ­ment
    • Heavy Industry & Manufacturing
    • Telecomm­unications
  • Lifestyle & Health
    • Consumer Products & Retail
    • Entertain­ment & Media
    • Health
    • Sports
    • Travel
  • Policy & Public Interest
  • People & Culture
    • People & Culture
  • Send a Release
  • Sign up
  • Log in
  • Resources
  • RSS
  • GDPR
  • Send a Release
  • Sign up
  • Log in
  • Resources
  • RSS
  • GDPR
  • Send a Release
  • Sign up
  • Log in
  • Resources
  • RSS
  • GDPR

St. Louis Fed’s Bullard Addresses the Risk of Yield Curve Inversion
  • USA - English


News provided by

Federal Reserve Bank of St. Louis

Dec 01, 2017, 09:05 ET

Share this article

Share toX

Share this article

Share toX

Federal Reserve Bank of St. Louis President and CEO James Bullard
Federal Reserve Bank of St. Louis President and CEO James Bullard

LITTLE ROCK, Ark. (PRWEB) December 01, 2017 -- Federal Reserve Bank of St. Louis President James Bullard gave remarks on “Assessing the Risk of Yield Curve Inversion” at a regional economic briefing in Little Rock on Friday.

Yield curve continues to flatten and, under some scenarios, could invert over the forecast horizon, Bullard says at Regional Economic Briefing in Little Rock, Ark.

Post this

In his talk, Bullard addressed the possibility of a U.S. Treasury yield curve inversion in the near term if the Federal Open Market Committee (FOMC) continues on its current higher projected path for the Federal Reserve’s policy rate (i.e., the federal funds rate target). He noted that an inverted yield curve (which occurs when yields on shorter-term government debt exceed yields on longer-term government debt) is often considered a predictor of recessions.

“There is a material risk of yield curve inversion over the forecast horizon if the FOMC continues on its present course of increases in the policy rate,” Bullard said. “Yield curve inversion is a naturally bearish signal for the economy. This deserves market and policymaker attention.”

He also discussed two possible ways to avoid an inverted yield curve—rising longer-term rates and policymaker caution. “It is possible that yield curve inversion will be avoided because longer-term nominal yields will begin to rise in tandem with the policy rate, but this seems unlikely as of today,” he said. “Given below-target U.S. inflation, it is unnecessary to push normalization to such an extent that the yield curve inverts.”

A Flattening U.S. Yield Curve that Could Invert

Bullard noted that the U.S. nominal yield curve has been flattening since 2014. While the spread between 10-year and one-year Treasury yields was nearly 300 basis points in early 2014, the spread has narrowed recently to 73 basis points.

“The FOMC has been increasing the policy rate over the last year, and thus shorter-term interest rates have been rising. At the same time, longer-term interest rates in the U.S. have not changed very much,” he explained.

He then speculated what might happen if longer-term yields remain near their average since 2012 and if the FOMC remains on track to raise the policy rate at the pace suggested in the FOMC’s September 2017 Summary of Economic Projections (SEP). He noted that, under this scenario, the nominal yield curve would invert based on the projected one-year Treasury rate.1 However, he said, “This scenario would not play out if either (1) the FOMC does not raise the policy rate as aggressively as suggested by the SEP, or (2) longer-term rates begin to rise in tandem with the policy rate.”

Consequences of an Inverted U.S. Yield Curve and Important Caveats

Both in empirical academic research and in more casual assessments, the slope of the yield curve is considered a good predictor of future real economic activity, Bullard said.

In particular, he discussed the empirical proposition that an inverted yield curve helps predict recessions, which he said makes sense to the extent that lower longer-term nominal interest rates may be a harbinger of both lower growth prospects and lower inflation in the future.

“To be sure, yield curve information is not infallible and inversion could be driven by other factors unrelated to future macroeconomic performance,” he said. “Nevertheless, the empirical evidence is relatively strong. Therefore, both policymakers and market professionals need to take the possibility of a yield curve inversion seriously.”

How Could Yield Curve Inversion Be Avoided?

“The simplest way to avoid yield curve inversion in the near term is for policymakers to be cautious in raising the policy rate,” Bullard stated. He noted that the St. Louis Fed’s policy rate recommendation is flat over the forecast horizon, meaning no planned policy rate increases—provided the economy continues to perform about as expected.

He added that another way to avoid yield curve inversion would be for longer-term nominal interest rates to begin to rise in tandem with policy rate increases, but the prospects for this are minimal. “U.S. longer-term nominal yields could move higher, but current trends seem to indicate that both the real and the expected inflation component will be subdued going forward,” he explained.
1 The projected one-year Treasury rate is calculated as the SEP median federal funds rate plus the average spread between the one-year Treasury bill and the federal funds rate.

Laura Taylor, Federal Reserve Bank of St. Louis, http://www.stlouisfed.org, +1 314-313-4613, [email protected]

Modal title

Contact PRWeb

  • 11AM ET Sunday – 8PM ET Friday
  • Contact Us

About PRWeb

  • About PRWeb
  • Partners
  • Partnership Programs
  • Editorial Guidelines
  • Resources

Why PRWeb

  • Why PRWeb
  • How It Works
  • Who Uses It
  • Pricing

Accounts

  • Create a Free Account
  • Log in
  • Contact Us

Do not sell or share my personal information:

  • Submit via [email protected] 
  • Call Privacy toll-free: 877-297-8921

Contact Cision

Products

About

My Services
  • All News Releases
  • Online Member Center
  • ProfNet
Cision Distribution Helpline
888-776-0942
  • Legal
  • Site Map
  • RSS
  • Cookie Settings
Copyright © 2025 Cision US Inc.