Esther George says the Fed’s ‘large balance sheet’ may have helped cause the yield curve inversion


Kansas City Fed President Esther George said the Federal Reserve may be partly responsible for the yield curve inversion.

“I think the Fed still has a large balance sheet, and that could be putting some downward pressure on those longer-term rates,” George told CNBC’s Steve Liesman from the Kansas City Fed’s economic policy symposium in Jackson Hole, Wyoming.

The yield on the benchmark 10-year Treasury note has fallen below the 2-year yield twice since Aug. 14, causing the bond market’s main yield curve to invert. The bond market phenomenon is historically a trusty signal of an eventual recession; however, George said the Fed could be influencing the long-end of that equation.

The Fed…


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