Please try to pardon my ignorance as you chortle at these naive questions. I have heard several reasons why "this time it's different", that the sustained inversion between Fed Funds and the 30-year bond does not indicate a coming recession. People do talk about this inversion being demand driven, with foreigners buying our Treasuries in record numbers, rather than supply, or liquidity, driven as in the past. Doesn't demand always control supply in this market? Why are Asians and Europeans different on this question? Would they be buying lower yielding longer term securities for some reason other than U.S. traders? I have also heard "real interest rate" (Fed Funds less Core CPI) mentioned. The fact that it is well below 3% is cited as a reason why we should not fear that this inversion predicts a recession. Why does that relate?
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