Question: You find that both the US and ECB treasury yield curves are backwardated. This is suggestive that: a. The yields of short term instruments are

You find that both the US and ECB treasury yield curves

You find that both the US and ECB treasury yield curves are backwardated. This is suggestive that: a. The yields of short term instruments are higher, after controlling for risk, than the yields of long horizon instruments b. The no-arbitrage equilibrium mechanism is failing C. There may be a flight of capital to safe haven investments d. The economy is growing steadily as one would hope e. There is an trade imbalance between Europe and the USA f. The US and European economies may be headed for recession

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