SPRINGFIELD (KOLR) — It was one of the worst days of the year for the U.S. stock market as multiple indices fell hundreds of points.
Specifically, the DOW Jones saw a tumble of about 800 points.
We could be nearing that here in the United States after several markets took big hits today. Stephen Evans, owner of Evans Wealth Planning says we are experiencing something called an “inverted yield curve”, which is throwing things off in the economy when it comes to bonds.
“Right now, short term rates — with an inverted yield curve — short term rates are paying higher than the long term, like 10-year rates. So you can put your money in something for two years and do better than you would if you put it in a 10-year. It’s not supposed to be that way because you’re putting your money in longer so you should get a better rate return,” says Evans.
The inverted yield curve has been a precursor to every recession for the past 50 years in the United States.
Evans says it could be because people are afraid to take risks with long term investments due to a number of things happening around the world.
“There is a lot of stuff causing this right now. We’ve got the trade war with China, we’ve got rates across the world at all-time lows, so other countries start buying our treasuries. That can cause it to go down,” Evans says. “The trade war isn’t helping, Hong Kong isn’t helping. The rest of the world’s interest rates aren’t helping. The Fed may have raised rates too fast, we don’t know.”
The one thing Evans advises people to do is to keep focusing on their financial goals, and not to panic.
Evans says some people may look at this as an opportunity to buy stocks, as the market seemingly being for sale.
The former head of the Fed Janet Yellen says that she thinks this is likely a false alarm.