Fed's Kaplan says U.S. is 'flirting' with yield curve inversion

FILE PHOTO: Dallas Federal Reserve Bank President, Robert Kaplan, stands on a stage at Stanford University's Hoover Institution where he is attending an annual monetary policy conference in Stanford, California, U.S., May 4, 2018. REUTERS/Ann Saphir/File Photo

DALLAS (Reuters) - U.S. bond markets are “flirting” with a yield curve inversion that could signal slower economic growth ahead, Dallas Federal Reserve Bank President Robert Kaplan said on Wednesday.

The current flat yield curve, where long-term borrowing costs are only slightly higher than short-term borrowing costs, suggests that “unless we make changes, we’re going to have sluggish future growth; trade tensions are part of creating this flattening,” Kaplan said at a conference at the Dallas Fed. “An inversion for me has to be of some size and of some duration and at the moment we don’t have either, but I’m watching carefully.”

Reporting by Ann Saphir; Editing by Chizu Nomiyama