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Former Fed Chair Yellen says the recession indicator in the bond market could mean a rate cut not a downturn

March 25, 2019


HONG KONG — Janet Yellen, the former chair of the Federal Reserve, said Monday that the recent triggering of a recession indicator in the U.S. bond markets could signal the need for a rate cut and not a prolonged economic downturn.

Stocks tumbled on Friday after an inversion of the so-called yield curve in the U.S. bond markets. This occurs when short-term rates surpass their longer-term counterparts, which hurts bank lending profits, and is considered a recession indicator.

Yellen, who led the Fed from 2014 to 2018, was asked about the yield curve and whether it signals a looming downturn at the Credit Suisse Asian Financial Conference in Hong Kong.

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