International Investing

Caroline Baum, Bloombergs Austrian, says that its coming so you better get used to it. Read the article in full here:

For those putting their faith in markets, one glance at the U.S. Treasury yield curve tells you something is amiss. The yield on every issue, from bill out to bond, is below the Fed’s target rate. That’s an unnatural state of affairs that violates Rule No. 1 of banking: borrow short, lend long. It makes it harder to turn a profit, which is one of the reasons financial stocks have been the biggest losers this year.

The spread between the funds rate and 10-year Treasury yield, which is one of 10 components in the Index of Leading Economic Indicators, has been inverted since July 2006 on a monthly average basis. Given that the U.S. economy was still expanding in the third quarter — at close to a 5 percent pace, if estimates for tomorrow’s revision are correct — the spread’s lead time looks to be long.