In early 2014 (as is the case much of the time), the Treasury's short-term interest rates are less than the long-term interest rates. This is, indeed, normal.
Sometimes the resulting yield curve that is created when you plot short-term to long-term rates is very steep.
In advance of every recession, however, since the 1970's, the Treasury yield curve inverts. Inversion is when the short-term interest rate is actually higher than the longer-term rates. This is not required to occur before a recession but it is one aspect of the economic landscape.
Of-course, this may not change your asset allocation but it might help you prepare for the slow down in the economy to come.
Your personal allocation strategy should be based on your personal situation. Remember that an inverted yield curve is not the norm and usually does not last very long.
An Introduction
Hi. Welcome to BourGroup and my blog. Phil
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.