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The U.S. Treasury yield curve has now been inverted for more than a month, with the 3-month bill paying a higher interest rate than the 10-year note.
Why it matters: An inversion is a near-perfect recession indicator that economists at the Federal Reserve recently called "the best summary measure" for an economic downturn.
How it works: An inversion of the Treasury curve means that investors see a higher chance they'll get paid back in 10 years than in 3 months by the U.S. government, the world's most secure borrower.
Yes, but: Many market watchers, including top economists and some of the world's biggest asset managers, believe that the extraordinary measures the Fed took after the Great Recession have fundamentally altered the market and things are different this time.
There is a bright spot: An inversion doesn't signal a recession is coming immediately. Typically, it takes 6–24 months after an inversion for a recession to begin, and stocks usually perform well in the interim.
The inverted yield curve on U.S. government bonds comes as central banks around the globe have signaled their intent to lower rates and ease monetary policy.
Be smart: Positioning in global bonds "is already ... around half the levels associated with a full recession," Deutsche Bank analysts said in a recent note to clients, noting that the market has been "chasing rate cuts."
The big picture: Fixed income investors are moving into Italian bonds, which have record low yields but are at least still positive, and other government bonds from countries that are facing significant budgetary and financial challenges in Europe, chasing any return they can find.
Consumer confidence in the EU has officially been negative for a full year, as the measure fell to an expected -7.2 reading Thursday.
Data from hedge fund Renaissance Capital shows that the second quarter was significantly better than the first for the IPO market.
Between the lines: The second quarter's strong numbers were masked by the ugly showing in Q1, when IPO activity was slowed significantly by the U.S. government shutdown. Capital raised for both domestic and cross-border IPOs during the first half of the year fell by 37% year-over-year, with volume down 34%, according to data from law firm Baker McKenzie.
What the data says:
The last word: Renaissance Capital CEO Bill Smith expects 2019 to be a "banner year," as Endeavor, WeWork, and Peloton are expected to come to market.
Shares of Oracle closed at another record high on Thursday, continuing to build on momentum from the company's strong earnings report last week. Thursday's gains show investors are still high on the software giant, even after its 8% jump following the earnings report.
Illustration: Aïda Amer/Axios
Axios business managing editor Jennifer Kingson writes: A delegation of Walmart food buyers went to the Summer Fancy Food Show in New York this week to sing the praises of cauliflower-crust pizza and tell small entrepreneurs: "We're eager to work with you."
Why it matters: Walmart has been ardently courting “the wealthy shoppers in superstar cities who traditionally shop on Amazon,” as Axios' Erica Pandey writes. Going toe-to-toe with Amazon’s Whole Foods means cozying up to mom-and-pops who sell artisanal halva, Malaysian condiments, organic cotton candy and other items at the trade show.
Mythbusting: Many of the 2,400 exhibitors at the trade show would be hard-pressed to supply 4,000 Walmart stores, noted Kevin Head, VP and divisional merchandise manager for breakfast and bread. “We have items that are in 10 stores,” he assured them.
Groceries, your way: Head described Walmart's big forays into home delivery, curbside pickup, and autonomous vehicles. "When that technology is ready, we will be ready," he said.
Trendy liquid: Among the hottest comestibles-of-the-moment is ... water, according to the Specialty Food Association, which runs the trade show. "Specialty waters are the top category forecast to grow over the next five years," according to a release.