Yield Curves Invert in U.S., U.K

Re:Yield Curves Invert in U.S., U.K by chrstphrhrt on Wednesday August 14, 2019 @11:24AM (#20696502)

I know nothing of finance, but I have a normal liquid savings account that's paying 2.25%, apparently "permanently". Why would anyone buy a less-flexible product that pays less?

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Re:Yield Curves Invert in U.S., U.K by dragontamer on Wednesday August 14, 2019 @12:17PM (#20697044)

> normal liquid savings account that's paying 2.25%

Yes. That's what an inverted yield curve means. Liquid funds are "more expensive" than long-term funds. That's why things are inverted right now.

The long-term expectation (over the course of the next 10 years) is that savings accounts will drop. That's why people are willing to "only" be paid 1.6% for a 10-year, because its better to be paid 1.6% for 10 years... rather than 2.25% for this year (and then only 0.5% for the next 9 years).

In essence: the bankers are taking the opposite bet you're making. When the bankers are making a move, you probably should think about the future of money... bankers probably know more than you and I do.

EDIT: > Why would anyone buy a less-flexible product that pays less?

Because they have a pessimistic view of the next 5 to 10 years. When big-money starts to make these pessimistic bets, its a recession indicator.

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Re:Yield Curves Invert in U.S., U.K by pb7 on Wednesday August 14, 2019 @05:41PM (#20700248)

It's not permanent, it fluctuates with the Fed's interest rates.

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Re:Yield Curves Invert in U.S., U.K by kileywm on Wednesday August 14, 2019 @11:45AM (#20696728)

That high yield savings account is (likely) unavailable to their tax-advantaged account(s) such as 401k. In that case, their choices may be limited to stocks or bonds.

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Re:Yield Curves Invert in U.S., U.K by astura on Wednesday August 14, 2019 @12:10PM (#20696972)

You can hold CDs in an IRA; currently Navy Federal is offering a 5-Year CD at 3.50% APY available for IRAs with no maximum purchase amount. [1]

Earlier this year I opened up an IRA with them and I put $100 in a 3.680% APY 40 months CD. I did this because they were matching the first $100 on new IRAs, so I deposited $100 and they deposited $100.

[1] https://www.navyfederal.org/products-services/checking-savin...

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Re:Yield Curves Invert in U.S., U.K by scott00 on Wednesday August 14, 2019 @01:21PM (#20697709)

It's not actually permanent. Your bank almost certainly has the right to change it daily, and once their asset acquisition goals are met, they probably will.

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