Federal Reserve committee members still insist that the U.S. economy is in great shape. Do you believe them?

Today, the central bank served up an emergency intra-meeting cut of 50 basis points. The new range for the overnight lending rate is 1.0%-1.25%.

Blame it on the corona virus, if you must. Yet the economy peaked in the 3rd quarter of 2018.

That’s why the Fed ended its tightening campaign prematurely in the 4th quarter of 2018. That’s why the central bank went on to cut overnight lending rates three times in 2019. That’s why they added hundreds of billions of dollars of quantitative easing (QE) liquidity in the 4th quarter of 2019. And that’s why the overnight lending rate (EFFR) is now down at the 1.0% level.

Making matters worse, the Treasury bond market still isn’t buying what the Fed is selling. For the first time in history, the 10-year Treasury yield fell below 1.0%. (It fell below 0.90% during today’s trading session.) In fact, nearly all yields on the Treasury curve hit historical lows.

Keep in mind, the 10-year yield began 2019 at 2.71%. It began 2020 at 1.76%. And now it is down at 1.00%. In other words, since the 2nd half of 2018, the Treasury bond market has been worrying itself to death about the stock bubble.

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