Ken Fisher Explains the Yield Curve and Why it Matters

Fisher Investments’ founder, Executive Chairman and Co-Chief Investment Officer Ken Fisher discusses the yield curve. Ken believes the yield curve is important economic indicator because it correlates with banks’ profitability and willingness to lend. He says a steep yield curve-where interest received on long-term loans exceeds banks’ short-term deposit costs-incentivizes lending and drives economic activity. Conversely, Ken says, when short-term rates exceed long-term rates (an inverted yield curve), lending conditions can suffer-potentially signaling a recession ahead.
Ken believes recent concerns on one yield curve measure-the narrowing spread between the 2- and
10-year US treasury rates-are misguided because it does not accurately reflect banks’ profit margins. He suggests using the 90-day and 10-year spread is a better yield curve measure and appropriately accounts for banks’ short-term borrowing costs relative to long-term loans.
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Investing in securities involves a risk of loss. Past performance is never a guarantee of future returns. Investing in foreign stock markets involves additional risks, such as the risk of currency fluctuations. The foregoing constitutes the general views of Fisher Investments and should not be regarded as personalized investment advice. Nothing herein is intended to be a recommendation. The opinions expressed are subject to change without notice.

[@yoyo762]

All while ignoring the fact that high interest rates kill the economy REGARDLESS if the spread is still positive. "banks will be eager to lend" So what?? If the rate is 8%, its a destroyer for loans. Asset prices will have to fall significantly to compensate.

[@DeRothschild]

You explained this concept very well on Neil Cavutos show a month ago and it left me wanting more. Thank you for this in depth explanation.

[@darwin6984]

appreciated to show with some visual diagram to visual for normal person like me

[@pablogubert]

He sounds bullish, doesn't he? Always worth 🎧.

[@Timmerdetimmerdetim]

does that apply to the eurodollar future curve inversion too?

[@skipavoid8733]

Please live a long and healthy life! thank you!

[@forexforfuntrader1937]

The easy way to read the Treasuries yield curve (for simple people like me): As a financial institution (or a Bank), you need to make profit of the deposits (Bank reserves) at your disposal. Treasuries are the most safest investment (and also very liquid). If you buy Treasuries you need to have in mind, that at the time of the maturity, you need to buy new once (or something similar that yields some profit). Financial institutions (and Banks) do know in advance when there are problems coming and will avoid having too much treasuries that mature at that time, as they will not be able to find save and good yielding investments for the liquidity (deposits/Bank reserves) at bad times. Hence the interest change for different duration of Treasuries at different times. By the way: When Banks make loans they are creating money (according to empirical prove provided by Prof. Richard Werner) and not using Bank reserves or deposits for that 🧐

[@eric714]

What would be a good source for "annual rate of bank loans". I'm not sure the google search is showing what Ken's referring to. Does he mean the APR? Or the volume of loans?

[@srinikoganti]

Do you still believe that markets are going through normal correction or have you changed your view ? Thanks.

[@성철스님-x8y]

are you still long?

[@clays7741]

Mr. Fisher did a good job explaining what happens after the inversion, but did not explain what causes the inversion.

[@Dan16673]

well it is more true than false, because of borrowing short and lending long. This leads to a decrease in the rate of m2 expansion

[@qwertz9501]

thanks alot

[@jesperchu990]

That’s a great analysis. Which sector should we overweight now?

[@이태경-q4u]

Korean fan

[@jeevakmukadam5754]

Perfect

[@florianeisele9945]

Great knowledge to learn from, thank you very much Mr. Fisher

[@markrimel8307]

Thank you, Ken Fisher. You seem to be the lone voice of calm and reason in an otherwise chaotic financial environment.

[@Swampdog55]

Thanks for all your videos! I enjoy watching and I have learned a lot! I also enjoy the presentation and the fact that they aren't long and get to the point!

[@petermaharajh2088]

I also wonder if the global yield spread is relative as you mentioned in your book

[@jayliu645]

Your explanation is so simple that even people like me can understand. Well said!

[@thawtchaibuparat7899]

Thank you, sir. Another debunkery from my guru 😊

[@karitokanake2562]

I want all the books at the back

[@karitokanake2562]

Thank you for teaching

[@e.l.6339]

as always great! greetings from austria, europe!

[@atriagotler]

Hi, Ken Fisher! I Would love to hear your thoughts on this. Historically the recessions have started 1-2 years after the inverting of the 90-day and 10-year interest rates. By the time the recession has started, the spread has been around 0.5-1%, and just a little after the start of the recession it has already been in the 2% range. It is now exactly two years since the 90-day and 10-year curves inverted. That surprise stimulus from COVID might have mixed things up for a while, but now that is over. What do you think of this?

[@iamtheonewhoknocks4288]

Tldr

[@freezorba6120]

Thanks a lot for your brilliant insight..

[@JVsMusicalSoundscapes]

It's a tricky tightrope for the Fed

[@xMohJeex]

Clear and concise. Thank you.

[@TT2601-h1n]

Thanks a lot for the great message as always.

[@Alan-wl5de]

great video thank you

[@ornamentallyyou]

Thanks Ken.

[@jimmeyer9648]

Thank you Mr Fisher

[@newsdd]

Great explanations

[@philippdur4652]

Great Speech !

[@스공스공]

Thank you!