Fed’s Bullard: Too early to say that treasury yield curve is signaling recession

James Bullard, president of the Federal Reserve Bank branch in St. Louis, while addressing questions at an event, said that a wider variety of treasury spreads need to invert and stay there for several months before concluding that it is sending a clear recession signal.

The spread between the yields on the 10-year and three-month treasury notes inverted (dropped below zero) last week for the first time since 2007, triggering recession fears. A widely-followed spread between the 10-year and 2-year yields is still holding well above zero.

Key quotes

•  Sees continuity in monetary policy regardless of who might join the Fed.
•  Sees likely rebound of growth in the 2nd quarter and rest of year, with the economy still in good shape.
•  it is premature to contemplate a rate cut now.