Signs, Signs, Everywhere Signs - But Are They Right? Yield Curve Signals Over the past half of the century, the yield curve had inverted eight times. In all instances, except for one, recession followed these occurrences. An inverted yield curve emerges when long-term Treasury rates fall below short-term rates. Some interpret inverted or flat curves as a sign of recession in the near future. And recently, we have been in a flat yield (and a slightly inverted) curve environment since early '06. Does this necessarily mean that we're faced with recession in the near future? Not necessarily. Some recent studies indicate that the recent yield environment reflects fundamental changes in macroeconomics and financial markets, particularly due to globalization. Globalization Keeps Long-Term Rates Low The interdependence between economies has lessened the effects of economic booms and busts as excess demands in one economy will be filled by excess supplies in other economies, and vice versa. This type of free flow of goods, services, capital and even people has lessened shocks to local economies. The stabilization of business cycles increases investor confidence in future economic conditions (particularly inflation), thus reducing risk premiums on long-term rates. Additionally, the high "savings glut" in other parts of the world has provided excess capital to borrowers. An abundant supply of this foreign capital has made their way into US Treasuries, helping keep long-term interest rates low in the US. Nevertheless, economic factors still affect long-term rates. |
> Buchanan committed $8,565,000 of joint venture equity and $17,631,000 of preferred equity to purchase the Las Palmas investment with Master Development Company. 
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> Arranged $114.4mm in non-recourse financing for Hines construction of a speculative office building in downtown Bellvue, Washington
