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Fed Presidents Seek Powell Put to Prevent Inverted Yield Curve

  • Central bank chief doesn’t seem inclined to go along
  • Inverted curve has reliably predicted past U.S. recessions

When Alan Greenspan ruled the Federal Reserve, investors became convinced the central bank could be counted on to prevent a stock market collapse -- the so-called Greenspan put. Now, Chairman Jerome Powell is under pressure to adopt what would amount to a put of his own, except this time it would be tied to the bond market.

Some Fed regional bank presidents want the central bank to be cautious in raising interest rates to prevent short-term Treasury yields from rising above long-term ones -- providing a kind of comfort that Greenspan gave equity investors. Those policy makers argue that such a yield-curve inversion has proven to be a reliable harbinger of past recessions.