In the same vein, committee members at the Federal Reserve appear determined to hike shorter-term interest rates. Yet longer-term rates have not responded as much as central bank planners would like. Consequently, we are looking at the flattest yield curve since 2007.

On the surface, there may not be a problem with 10-year Treasury bond yields mimicking 2-year Treasury bond yields. Or 30-year Treasury bond yields resembling 5-year Treasury bond yields.

On the other hand, neither the u.s. stock market nor the U.S. economy has ever performed particularly well when longer-term yields fall below shorter-term ones. The phenomena is called “yield curve inversion,” and it is often associated with economic recession. Indeed, should the Fed remain resolute, the 40 basis point differential between the 30-year and the 5-year might evaporate quickly and subsequently invert.