August 13, 2019 was a day that included a disturbing move for one of the key economic indicators that we use to predict the direction of the U.S. economy as a whole. Usually, if an investor is investing in US Treasuries, they will get higher rate on a 10-year Treasury than they will with a 2-Year Treasury. That would make sense. Every now and then, however, that curve “inverts” or flips. This is called an inverted yield curve, or a negative yield curve. On the 13th, we saw the rates in 2-year Treasuries actually exceed the yields for 10-year Treasuries. When a negative yield curve, or an inverted yield curve, happens, it is usually an indicator that recession is not far away. Other key indicators, however, remain relatively strong with overall employment rates running as high as they have in recent memory. Industrial output, however, slowed a bit as did the number of hours worked. President Trump continues to press the Federal Reserve to lower rates and he is continuing his hard push for tariffs with countries such as China. There are enough red-flags showing up in economic numbers that Castle Rock Capital Management is recommending a cautious approach to real estate-based investing based on the inverted yield curve. It’s still a great place to invest if done wisely, you just need to ensure that you are following sound investment principles.
