The Yield Curve Effect

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  • 36 mins 08 secs
Since the 1960s, the U.S. has witnessed 7 recessions, and an inverted yield curve preceded them all. Today, the curve is certainly flat, and the probability of an inversion in 2019 is rising.

Does this mean a recession is imminent?

Watch Ivy Live to hear our take.

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Transcript from Ivy Live

September 2018

 

Jeff Gentle

Good afternoon, and welcome to Ivy Live.  With the economy humming along, it seems the street's focus has turned to sniffing out the next downturn.  A lot of the attention is focused on the yield curve and for good reason.  Since the '60s, the US has seen 7 recessions and an inverted yield curve has preceded them all.  While not yet inverted, the curve is certainly flat, and the Fed seems to have every intention of raising Fed funds by at least 100 basis points over the next year and a half.  Does this mean inversion and recession are imminent?  What does a flat or inverted yield curve tell us; and importantly, what other indicators should we be watching? 

Thanks for joining.  We have three experts with us today bringing a lot of knowledge in both bond and equity markets.  Joining us are portfolio managers Susan Ragen, Matt Norris, and Jeff Surles.  We have a new broadcast platform, so I want to highlight a few things.  On the bottom, you can open, move, minimize, and maximize the icons to your personal preferences.  The icons are relatively self-explanatory, but to highlight a few, send your questions throughout the live event through the Q&A icon and register for the next Ivy Live. 

Let's get to the topic at hand, Susan.  We have the economy growing at maybe 4%+ for two quarters in a row, and here we are talking about when the downturn is coming, and that's typical, I guess. 

 

Susan Ragen

Well, that's the nature of the fixed income world for the next--

 

Jeff Gentle

So, we're going to talk a lot about, among many things, about the curve and what it's doing.  It's gotten a lot of attention.  I think the curves, the flattening is when the spread between the 10s and the 2s gets about 50 basis points or lower.  People start paying a lot of attention to it.  Today, we're at about 25 basis points.  Let's start off about some theories about that and what may be driving the flattening today, and we will start out with, I guess, expectations theory. 

 

Susan Ragen

This kind of goes back to your college classes where you learn all about interest rates and the expectations theory is basically saying that interest rates are a sum of all the rates.  For instance, the five-year is the sum of the five one-year securities bought each year.  So, you know, that's pretty much a mathematical calculation. 

 

Jeff Gentle

It's a geometric average. 

 

Susan Ragen

Exactly.  You know, that can tell you a lot about where you think interest rates are going, but it doesn't always tell you where they actually do go. 

 

Jeff Gentle

What would expectations theory tell us about what the curve's doing today, why it's been flattening? 

 

Susan Ragen

Well, I think it tells you that, you know, the thoughts are that the growth is going get lower and inflation is not going to go higher.  That's what I think that's telling you is that even though the Fed is pushing up on rates, the long end of the curve isn't reacting as much to it because it doesn't believe that things are going to get better. 

 

Jeff Gentle

Okay, so we could we say that the Fed is causing the inversion from that standpoint? 

 

Jeff Surles

To an extent yes.  I think you have to remember that the Fed is also still manipulating the yield curve.  I mean, you have to look at the stock of treasuries.  I mean the Fed was conducting QE for a long time, and you have to remember through Operation Twist, the Fed is mainly sold out of all short-term treasury securities, and the stock is still long-term treasury securities, so where you've had the market flooded with shorter term notes and bills, you still have this huge stock of long-term securities that are on the Fed balance sheet.  To top it off, treasuries made a decision with essentially increased budget deficit that we've been running post Trump tax cuts that they're going to issue more heavily on the bill side which also helps push up short-term rates as well.  You know, the Fed does have something to do with it, but the Fed is not the only factor here.  There's treasury factors, and there's broader factors in the economy that are also causing it. 

 

Jeff Gentle

Okay.  So, we spoke about the Fed and what they're doing.  I guess that would kind of go into another theory of what drives the curve and that segmentation theory.  Could you describe that for me? 

 

Susan Ragen

With segmentation theory, it basically says that each point along the curve is caused by supply and demand.  To an extent, I suppose that's true.  When there are dislocations, there's always someone that comes in and does an arbitrage and fixes it, so you know, I think you could say that.  That one, you know, I have a harder time with that one, I think.  I think part of the, you know, what's going on with the long-end of the curve is, you've got a lot of pension buying.  There's a lot of pension buying in the long-end of the curve, and there's a lot of money going into pensions because as they take their equity profits off the table they go more into fixed income, so we've had a lot of that driving long-term rates lower too.  I think all these theories of interest rates kind of work together.  I don't know that any of one them explains the whole yield curve phenomenon, but I think in combination they all kind of tell a little bit of a story. 

 

Jeff Gentle

So, you're point about pension funds-- there's a tax exemption that expires at the end of this month. 

 

Susan Ragen

Or just did.  Just did last week, and that's, some people think that part of the increase we've seen in rates just this week is because that's behind us.  That could be true.  You know, we'll probably know more later.  Hindsight seems to work a lot better than figuring out what's going on with rates at the time it's happening. 

 

Matt Norris

But the Fed has started to sell and shrink a balance sheet, right?  But is it just not enough to matter yet? 

 

Susan Ragen

You know, there are buyers coming in, so you know, we'll see if that change in the pension and the long-term pension buyers, if that demand goes down, obviously we should see more impact on rates, increasing rates in the long-end.  Don't know; don't know, but we've seen it this week. 

 

Jeff Gentle

A lot of people, market pundits, I think, have been talking about, you know, I guess every time an inversion happens or the yield curve gets flat, they say, "Well, you know, we've got this going on.  It's different than the last time because of this."  We had the Save the S&L crisis and we had a lot of things pointing, but it's different this time.  One of the things that people talk about is the negative term premium - why that may cause an inverted yield curve to really not be a signal.  Can you speak about the negative term premium a little bit? 

 

Susan Ragen

Sure.  It's thought, you know, that interest rates, for instance, the ten-year is a function of growth plus inflation plus term premium.  If growth is 3%-ish and inflation is 2%-ish, then that would be 5%.  Well, we don't have a 5% ten-year.  We've got a 3% ten-year, so that would give you a -2% term premium roughly.  You know, the term premium, it's kind of a plug factor even though that's what they do in hindsight.  They like to see what the term premium must have been, but we know that interest rates are not as high as they would otherwise be, so that term premium has to be negative. 

 

Jeff Gentle

Jeff, the term premium is to compensate investors for risk, right?  Basically duration risk, you're investing out longer the curve, it's more uncertainty.  If you've got a negative term premium, then you're basically paying for risk right now.  I mean what does that say about--?

 

Jeff Surles

Kind of in the textbook sense of the word, yes, but you know, when you think about it, the treasury is still, you know, it's your risk-free rate of return.  As Susan said, it's an expectation.  It's an expectation of where future interest rates are going to be.  Right now, the longer end of the curve is telling you that it doesn't think that the levels of nominal growth that we're seeing right now are very sustainable and there's a lot of risk to that level of nominal growth, and that nominal growth has been juiced by a lot of easy monetary policy.  It's now getting juiced by fiscal policy which is helping out both on the tax front, and you know, you're seeing structure reform in a lot of economies around the globe, and that's helping the support growth as well.  You know, it's largely being supported by fiscal spending in a lot of these countries.  There's a number of factors to it, but while that might be a textbook definition of it, at the end of day, the treasury is still the risk-free rate that you are going to get in the market, and that risk-free rate is used to price a lot of different asset classes. 

 

Jeff Gentle

Let's get to the question.  A 25 basis-point spread between 10s and 2s-- we believe that the Fed will hike two more times this year.  I think that's the consensus.  Do we invert December or January? 

 

Jeff Surles

I have a hard time seeing us inverting that soon given how strong growth does continue to be.  I think if we do-- the more you sustain the levels of nominal GDP growth that we've seen, the greater the likelihood that the long-end of the curve will start to price in greater sustainability of long-term growth.  I would be surprised if we saw the curve invert that early, especially because we are still getting the benefits of easier fiscal policy.  For the most part on the equity side, companies we talk to still tell us across the board that demand is doing okay.  You know, I would be surprised if you didn't see the long-end move up gradually as we do continue to hike rates.  That said, I would not be expecting the curve to materially steepen in any way, shape, or fashion as we go forward. 

 

Susan Ragen

I agree.  I think the curve-- possibly, it could invert, but I think it, rather than that, I think it will just be very flat.  It could get flatter than what we're seeing now, and while it's not entirely-- obviously, the two-year is a function of the Fed.  So, now next week when the Fed moves, the two-year is not going to move 25 basis points.  It's already built in.  It's going to be based more on what the Fed says in the statement.  That's going to determine how the two-year moves and the press conference, so the two-year, it's already built in what it's going to do, but I think we could definitely see higher-- the two-year should keep gradually going higher as more and more rate hikes are built in, and the long-end is going to obviously probably go higher too, but that curve is still going to stay extremely flat. 

 

Jeff Gentle

So, the chances next year-- we can't call the future, but if you had to put a probability on an inversion in 2019, what would you say?  High or low even?  No?  No comment? 

 

Susan Ragen

If I said 50/50--?  That's a chicken way out, isn't it? 

 

Jeff Surles

For the early part of the year, I think the probably is still fairly low.  I think it rises more towards probably the 30 to 40% range as you get more towards the end of the year, but I think at least for the first half of the year, it's pretty low. 

 

Jeff Gentle

Okay, and the reason we're concerned with this of course is it's been a fairly reliable indicator of a recession coming up.  You know, since I think the past 4 recessions, it averaged-- the recession was 17 months after the curve inverted, somewhere around there which brings us to the question, and there's a lot of academic back and forth on this, and I don't think anybody's come to any good conclusions, but you have to raise a question.  Does a curve inversion cause a recession or are there economic factors out there that cause a recession that the curve inversion is just signaling?  Is it the chicken or the egg?  Can the Fed not invert the curve, stop raising rates, and we're free from recession risk?  Or is it already built into the economic factors anyway.  Matt? 

 

Matt Norris

Really, I strongly believe the curve does not cause a recession, but it's a symptom of what's going on in the economy, so a recession is really an unwinding of economic access.  Let's think back to '08.  The home-building market was booming.  House prices were going up, so you have banks making loans.  You have speculators buying multiple houses trying to sell them again.  You have everybody building houses as fast as possible until you outstrip demand, and then it has to unwind.  The speculators lose money.  The banks lost money.  The carpenters and plumbers get laid off.  They don't get out to dinner.  It spreads like rings in a pond, but the bond market sees this as very good.  It's seeing the future is investing that way.  When the economy is strong, the Fed will be raising the short end, and bond investors are going longer for the safety, and so the yield curve inverts.  They are so good at it, that they generally beat us equity guys to the punch, and that's why the yield curve inverts really before we actually know that we're totally in a recession. 

 

Jeff Gentle

One of the arguments to the inversion, or I think the best argument that you read or hear is that the curve inversion, you know, banks don't lend anymore.  They are borrowing short and lending long.  It doesn't work, so just credit is cut off.  Can you speak to that a little bit?  I don't know that that really shows up in the data. 

 

Matt Norris

Well, it will just slow economic activity by not lending which probably has a depressing effect on inflation.  If you think that longer-term bonds have to build in an inflation premium, you know, that would pull those rates down also, but to me, it's just a combination of everything in the economy.  It kind of slows together and all the tendrils that go out-- the bond market is usually pretty predictive and on top of these things. 

 

Jeff Surles

I would agree with Matt.  I think the curve is a symptom, and you have to remember, think about exactly what the treasury curve is.  The treasury curve is the deepest, most liquid financial market anywhere in the world.  You are not going to find a truer market signal anywhere than on the treasury curve.  It better reflects market expectations than any financial instrument anywhere in the world because of the depth of its liquidity, and it tends to be very, very good at predicting not only recession but a number of things, so I view the curve much more as it is a symptom of what is happening in the economy more than a cause of what is happening in the economy. 

 

Jeff Gentle

So, would you view an inversion as a storing signal of an upcoming recession?  Do you think it is an absolute predictor? 

 

Jeff Surles

I think it's a very strong predictor.  Absolutely it's a little bit of a big word, but it is a very good predictor.  You know, the question is just how long is the curve inversion going to precede a recession.  That's a bigger question, and that's much harder to predict. 

 

Jeff Gentle

Yeah, I think average, I said over the past four recessions has been 17 months, but there's a lot of variability around that number.  Do you have thoughts on this, Susan? 

 

Susan Ragen

I totally agree with what they both said.  I think that it doesn't cause recessions, but it's very telling. 

 

Jeff Gentle

A very good indicator.  You know, Jeff, I spoke with you yesterday a little bit about, you know, it's been a very good indicator in the US, but it hasn't been such a good indicator in places like Australia and Germany and Japan.  I would think if it worked in one developed market, it would work in others, so does that dismiss this indicator as being a good predictor of recession? 

 

Jeff Surles

I think you need to go back to what I just talked about: liquidity.  The US treasury market is by far and away the largest, deepest market out there.  When you go internationally, a lot of these international curves are not nearly as deep or as liquid as US treasury markets are and don't give nearly as good of an indicator.  You know, what's more, you know, you look over in Europe and a lot of these yield curves are really young yield curves.  You know, they exist in a different form now that they are on the Euro.  You got to remember, the Euro only came into existence in 2002.  Before that, all these countries were on their own national currencies.  You know, you to go the periphery, especially in Europe to Italy and Spain, and these were countries that had very, very high interest rates where the curve wasn't a good predictor of anything.  You know, you go to the Japanese market, and while that is a bigger, deeper market, there's an unprecedented amount of manipulation going on in that curve by the Bank of Japan.  The Bank of Japan has been conducting quantitative easing since the mid-1990s.  It owns almost half about 46% or something like that, of the JGB market.  The Japanese Government Bond market is owned by the BOJ.  You have an unprecedented amount of manipulation.  If you look at the curve in Japan right now, you know, the BOJ is essentially controlling the short rate, the two year at the -10 basis points where the BOJ wants it.  They are also controlling the ten-year rate.  It's just above 10 basis points, but you go out beyond the ten-year, and is the BOJ conducting operations and buying longer-term JGBs?  Yes, it is, but it is not controlling them to anywhere near the extent.  It is the shorter part of the curve.  If you look from the ten-year out to-- Japan actually has debt all the way out to 40 years.  There is steepness, 10s to 40s, where the BOJ is not manipulating the curve anywhere near as much.  Where the ten-year is at 13 basis points, the 30-year is at 85 and the 40-year is at 1%.  You are seeing steepness in the curve further out in Japan. 

 

Jeff Gentle

Okay, so you know, we've had thoughts on inversion and what that does to the economy.  Let's talk a little bit more about where we are now.  You believe that the curve will be flat for a length of time here.  What kind of-- what's an outlook for bond markets or equity markets in a flat-curve environment? 

 

Matt Norris

For the equity, it's a tricky call, so you mentioned the yield curve may invert average 17 months before we actually really recognize we're in a recession.  When you think about that, the economy's doing great usually.  That's why the Fed's raising rates.  There's wage inflation.  There's goods and services inflation, and that's their job is to keep that under control.  You often get some of your best equity returns just in the last six to twelve months, you know, running up the side of the mountain right to the peak right before you fall off the other side, so it's kind of a tricky game to play.  We watched the jobs numbers very closely and the inflation numbers, but when the yield curve, when and if it does invert, I will get very concerned, but I would also kind of counsel people-- don't just run for the hills day 1.  Watch the broader economy because you can really miss out on a lot of good money in the last 6 months or. 

 

Jeff Gentle

Even in lengthy, flat-curve environments like we had in the mid to late '90s, we saw, I mean, equity returns were awesome, so what does kind of that flat curve tell you?  Does that tell you that maybe Fed policy and growth and inflation expectations are balanced kind of?  Or is that why it makes for a good business environment?   Or was it just chance in the '90s? 

 

Jeff Surles

Well, the one things it does do is it tells you inflation expectations are well in check.  You know, the market is not concerned about the easy monetary policy that we've had causing some sort of longer-term inflation problem at this point in time which is generally a pretty good indicator for risk assets.  Risk assets tend to do well when inflation expectations aren't out of control.  From that aspect, it's pretty positive.  But you know, you look at what it means for fixed income markets, and it does make the return environment for fixed income markets pretty tough in that type of environment.  I mean, both Susan and I have talked about probably short- and long-term rates kind of a gradually rise, which you know, rising rates is always a hard market to make money in within bond markets.  You have to be very careful we here you place your bets.  Sometimes, you have to go into riskier fixed income securities.  You've got to go into credit.  You've got to go into mortgages.  We've seen credit perform-- especially risker credit-- perform extremely well here.  High yield has done very, very well year-to-date.  So, you know, you are going to see people go out and take other types of risks in fixed income markets to try to get some type of return because getting a return out of treasuries other than just the return you're going to get from T bills in a risk-free environment is very difficult. 

 

Jeff Gentle

Do you go to the belly of the curve here?  Is that the safest place?  Or do you go as a bond investor? 

 

Susan Ragen

Well, there's value in the very front end of the curve in cash, in the commercial paper, but you know, I think our strategy, what we're trying to do on our funds, is gradually go up in quality because we think we're closer to the end of the credit cycle regardless of whether the curve inverts.  This boom has been going on for quite some time, and nothing lasts forever, so our strategy is we're going gradually up in credit.  In other words, we're getting out of our riskier credits but gradually because we don't do anything all at once.  We're also gradually adding duration.  Because in fixed income, it's really hard if everybody's going out that revolving door at the same time, trying to sell the riskier stuff or buy things.  It's hard to get it all done at the same time, so you want to kind of scale in, so we're kind of making that play that, okay, we think we're closer to the end.  Let's try to get a little bit longer in duration.  Let's get-- because we think the Fed-- the Fed says four more hikes.  I'm skeptical myself that we'll see four more hikes.  Two?  Yes.  Trade could impact things.  I think growth could definitely be impacted down the road.  So, I'm not convinced we're going to get four.  I think there could even be a pause before they do the third one.  I think, you know, trying to get ahead of it a little bit is what we're trying to do.  We think that's kind of a good, safe strategy. 

 

Jeff Gentle

Getting off the topic just a little bit here, can global liquidity conditions, can we take four more Fed rate hikes?  I mean, we've seen what has happened to EM. 

 

Jeff Surles

Can it take four more rate hikes?  Yeah.  I don't think EM is going to be the best of asset classes in that particular scenario.  You know, you do have to remember that outside the US for the most part, central banks are still in pretty easy mode.  The BOJ just continues to be in easing mode.  There has been noise that the ECB is going to pull back a little bit.  I mean, the ECB, the stock on the ECB balance sheet is still quite large.  So, you know, it's not the best scenario for EM, but I do think EM can survive it.  You know, the bigger question is, you know, I think what happens to developed international markets.  It's kind of interesting.  You know, we've talked about yield curves as predictors, and you look around the globe and for the most part developed market yield curves outside the US are, they are still steep, especially in comparison to the US curve.  I talked earlier about the Japanese curve.  You know, if you look in Germany, there is-- Germany is largely considered the risk-free curve for all of Europe.  There's 100 basis points of steepness on the German bond curve.  Now, it's a little unusual because the two-year is at like -52 basis points which, you know, it looks a little weird and the ten-year is at about 48 basis points, but there still is 100 basis points of steepness.  Now, that does cause some problems because a lot of what makes that steepness so beneficial to the economy is that the banks can really benefit from it, and while a bank can only take a deposit at 0% interest rate, it's not going to get a deposit at -50 basis points because you're not going to give the bank $100 just for them to give you back $99.50 at the end of the year.  They can only take the interest rate to 0, so they're not the full beneficiary of that curve, and that's largely reflected in European bank valuations which trade significantly below book, but you know, there still is a steepness there.  The curve is telling you that the economy is okay.  Now, granted, it's not as good of an indicator as the US treasury curve, but it still is an indicator.  It's telling you that growth should be okay in those markets. 

 

Matt Norris

I think the Fed has an impossible job.  That's one job I never want.  My ability to predict Fed moves is pretty much 0 also, but it's hard.  They see the economy strengthening, so they worry about inflation.  We've seen wage inflation just starting to kind of appear now.  Where will it be in a year?  We don't know.  They may raise rates now, but the impact is not measurable for about nine months, so they may wait three months and do it again and they don't know they've overshot before it's too late.  It's just really a hard job.  When you look historically, I would have to say the Fed probably will overshoot because it's just really kind of hard to stop that ball from rolling downhill without crushing it, so I'm going to disagree and go with the four hikes. 

 

Jeff Gentle

So, with the flat name, has it concerned you with managing an equity portfolio?  Is it causing you to make moves that you wouldn't have, say, if the curve had 50 basis points more steepness in it? 

 

Matt Norris

For most sectors, it doesn't matter that much.  Companies today in general have a lot of cash.  They have borrowing ability.  Interest rates are still very low historically, really anywhere across the curve.  The one sector that it can really hurt would be banking where you make a loan by borrowing short.  I'm paying you very low interest on your savings account, and I'm lending it somewhat at a higher rate based on the ten-year.  As the yield curve flattens, their net interest income, that spread gets compressed, so you've seen banks do well here in the last few days as the ten-year suddenly yield went up, but that can turn around in a second.  We've looked for financials that depend less on the yield curve to make a profit and more on other fee-based businesses that they're the more insulated from the curve. 

 

Jeff Gentle

Okay, we did have a question, but I think you answered it earlier when you talked about what you were doing in your bond portfolio, so I hope that answers your questions.  I did want to get into other things that we will look at if and when the curve inverts.  There are other indicators that are telling us what we should be doing with our portfolios, risk indicators.  What are some other important things?  When we see the inversion happen, do you start looking at other indicators more closely to kind of time the cycle of where you want to be in this part of the cycle? 

 

Jeff Surles

Yeah, that's kind of a tough question from our perspective because we're not really-- I mean, we're not trying to time the cycle so much.  We're going to be invested over the course of the cycle.  You know, we look at it more about how we're going to adjust risk within the portfolio, so it's, you know, timing is very tough to do, and it's an easy way to get yourself in trouble, so we try not to time.  I can't say we might look at other indicators less or more, but you certainly keep your eye on multiple indicators across the board.  The yield curve is one.  What's happening with nominal GDP, the jobs data, and we get to meet a lot of companies.  You listen to what companies are telling you, what their visibility into demand is to try to gauge when you maybe should be adjusting risk within the cycle. 

 

Susan Ragen

I think the purchasing majors, the ISM numbers are important because that's a pretty current number when it comes out, and it tells you, you know, what companies are doing in addition to companies that come to our offices, but you know, the reading over 50 is supposed to be expansionary, and I think the latest was around 60, so I mean, we're still doing very well, but I think those are numbers to watch if they start moving down. 

 

Jeff Gentle

Global PMIs are reasonably-- I mean, Europe PMIs are good.  China's not great. 

 

Jeff Surles

Europe PMIs have actually softened up here pretty-- softened up quite a bit actually.  It's been a little concerning how much they've softened up.  You know, the thing is though, you talk to European corporates though, and European corporates really aren't seeing it in their demand data.  There's also a few transitory and comp things which made the PMIs a little hard in Europe, so we do think you're going to see a little bit of a rebound in European PMIs, but it definitely caught our eye when-- especially this spring, European PMIs softened up. 

 

Jeff Gentle

Right, right.  Anything you look at more or less? 

 

Matt Norris

So, I've got a couple of favorites.  One, I always watch the jobs number.  If you're creating jobs, people are spending money and paying their bills, so you look at new job creation at the start of every month, and you look at initial jobless claims that come out more frequently.  So far, I mean, those numbers are really spectacular.  We just-- everyone's got a job.  When that changes, as an equity guy, I need to sell discretionary stocks.  I don't want to own retail or media or hotels or places where people are spending money if they don't have a job.  Another one that's a little goofy but it's very real-time is cardboard-box data.  Every cardboard box factory in America counts the number of boxes they make every month, and they publish it at the end of the month, so it's real-time and it's perfectly accurate.  It's not a survey.  Everything you probably owned in your life spent a little time in a cardboard box getting from the factory to you, so when you see those trends turn negative, and they've been positive for years, nice, slow, steady growth, but when you see that turn negative, it makes you stop and wonder and think, okay, suddenly demand didn't meet supply this month, so people aren't shipping-- a very real-time indicator. 

 

Jeff Gentle

Okay.  So, consensus-- opinion here at this table at least, no inversion in the very short term.  Flat curves are fine for wealth equities and present some challenges for bonds, but you've got some ways to work around that, so we'll be watching for what the curve does going forward, if it inverts or not and adjust from there.  I do think it's important to let people know that even after an inversion, there's typically been ample time to make portfolio adjustments before and typically you're losing out on that large part of that cycle gain if you're out of the market at that point in time, so it's not an immediate concern if the curve inverts if history repeats itself.  Thank you, Susan, Jeff, Matt.  I appreciate you being here again.  I look forward to having you all back at a later date and talk about a different topic.  Thank you and be sure to register for October's Ivy Live as we discuss the technology industry in emerging Asia.  We are fresh off of a two-week trip through the area and will have a lot of insight.  Is emerging Asia the new Silicon Valley?  Might be.  Thanks for joining us.  We leave you with our promo for October. 

 

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Before investing, investors should consider carefully the investment objectives, risks, charges, and expenses of a mutual fund.  This is other important information is contained in the prospectus and summary prospectus which may be obtained at IvyInvestments.com or by calling the Ivy Distributors, Inc. sales desk at 800.532.2780.  Please encourage your clients to read it carefully before investing. 

 

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Past performance is not a guarantee of future results. Remarks on these panels are for informational purposes only and are not meant to predict or project the future performance of any investment product. The opinions are current through the date of each panel, are subject to change at any time based on market and other current conditions, and no forecasts can be guaranteed. The information is not a recommendation to purchase, sell or hold any specific fund or security mentioned or to engage in any investment strategy. Strategies or general securities discussed may not be suitable for all investors.

This information is intended for use by financial advisors with persons who are eligible to purchase U.S.-registered mutual funds. Securities offered through Ivy Distributors, Inc.

IVY INVESTMENTS® refers to the investment management and investment advisory services offered by Ivy Investment Management Company, the financial services offered by Ivy Distributors, Inc., a FINRA member broker dealer and the distributor of IVY FUNDS® mutual funds and IVY VARIABLE INSURANCE PORTFOLIOS℠, and the financial services offered by their affiliates.

© Ivy Investment Management Company. All rights reserved. IVY FUNDS®, IVY℠, and IVY INVESTMENTS℠ are the service marks of Ivy Distributors, Inc. All other trademarks and service marks are those of their respective owners.