Weekly Update:

Good morning!

The world is full of naysayers. It is easy to say one cannot do something versus actually getting up off of the couch and doing it yourself. And, just as I give the advice, I will be reminded that I thought the French would never win the World Cup and Tesla would never increase production. Congratulations France on a 4-2 victory! Along the same line, Elon Musk is smiling as he is now producing over 5,000 Tesla Model 3 sedans a week. This is an amazing accomplishment that many said he would not achieve. Remember, believe in yourself and go for it.

And so, I enjoyed eating my lunch bet winnings as the 10-Year/2-Year Treasury Yield spread narrowed to below 30 basis points. This is what we call a flat yield curve.

If the yield curve between the 2-year US Treasury to the 10-year US Treasury becomes inverted, the clock starts ticking towards a recession. Historically, an inverted yield curve has been the best predictor of a recession. Roughly 18 months after the inversion we tend to have some sort of a slowdown in the economy.

The inflation rate as measured by the Consumer Price Index without food and energy rose at a pace of 2.30% over the past year. Inflation is building, albeit at a slow pace.

A flat or inverted yield curve may result in increasing deposit costs and unchanged loan yields. Contact your advisor to discuss maximizing your duration to ensure your long-term success.

Have a great week.

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