Summary:
This article continues the previous discussion of bank net interest margins. In it, I discussed how changes in the yield curve changed the net interest margin (NIM) for banks. This showed up historically — when bank balance sheets were shattered by the combination of holding long-dated mortgages with low fixed coupons versus having a sky-high short-term rate imposed by deranged Monetarists. In this article, I address a common macroeconomic story: yield curve inversions cause recessions by the alleged effect on NIM. As a spoiler, I do not think that story holds water in “modern” banking systems..…Bond EconomicsYield Curve Inversions And RecessionsBrian Romanchuk
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This article continues the previous discussion of bank net interest margins. In it, I discussed how changes in the yield curve changed the net interest margin (NIM) for banks. This showed up historically — when bank balance sheets were shattered by the combination of holding long-dated mortgages with low fixed coupons versus having a sky-high short-term rate imposed by deranged Monetarists. In this article, I address a common macroeconomic story: yield curve inversions cause recessions by the alleged effect on NIM. As a spoiler, I do not think that story holds water in “modern” banking systems..…Bond EconomicsYield Curve Inversions And RecessionsBrian Romanchuk
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Mike Norman considers the following as important:
This could be interesting, too:
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This article continues the previous discussion of bank net interest margins. In it, I discussed how changes in the yield curve changed the net interest margin (NIM) for banks. This showed up historically — when bank balance sheets were shattered by the combination of holding long-dated mortgages with low fixed coupons versus having a sky-high short-term rate imposed by deranged Monetarists. In this article, I address a common macroeconomic story: yield curve inversions cause recessions by the alleged effect on NIM. As a spoiler, I do not think that story holds water in “modern” banking systems..…Bond Economics
Yield Curve Inversions And Recessions
Brian Romanchuk