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Janet Yellen says the reversal of the yield curve may be a signal of a false recession



Janet Yellen

Scott Mlyn | CNBC

Former Federal Reserve chairman Janet Yellen said the markets could be wrong this time, trusting inversion of the yield curve as an indicator of recession.

"Historically, this was a pretty good signal of a recession, and it seems that markets are paying attention to that at the time, but I would really insist that it be a less good signal on this occasion," said Yellen on Fox Business Network. "The reason for this is many other factors than market expectations for the future interest rate path that lower long-term yields."

The yield on the 10-year reference government bond was 1.623% on Wednesday, below the 2-year yield at 1.634%, which reversed the main bond market yield curve and a sharp decline in the markets. The bond market phenomenon is historically a reliable signal of a final recession; Yellen said that this time could be different.

Asked if the United States is falling into recession, Yellen said, "I think the answer is probably negative. I think the US economy has enough strength to avoid it, but the chances have clearly increased and are higher than I'm honest, I feel good, "she said.

Yellen is not the only other former Fed chairman who is considering lower profits. With more than $ 15 trillion in government bonds around the world at negative interest rates, former Federal Reserve president Alan Greenspan said Tuesday "no barrier" to US negative returns

"There is an international arbitration on the bond market that helps reduce the long-term income of the Treasury," said Greenspan in a telephone interview with Bloomberg. "There is no barrier to US Treasury yields below zero. Zero doesn't matter except at a certain level. "


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