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Report: Fed's Evans says yield curve concerns understandable, but economy strong

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Report: Fed's Evans says yield curve concerns understandable, but economy strong

The Chicago Federal Reserve president acknowledged investors' nervousness around the U.S. yield curve which inverted March 22, but said the U.S. economy was in a good shape, Reuters reported.

Yields on the 10-year Treasurys dipped below the yields on three-month Treasury bills on March 22, sparking concerns over the U.S. economic growth as the inversion is seen as a prelude to a recession. At the Credit Suisse Asian Investment Conference in Hong Kong, Charles Evans said the inversion was "pretty narrow," and the lower growth trend and lower interest rates make a case for the yield curve to be flatter in general.

"I think we have to be a little bit nervous obviously," Evans said in an interview with CNBC, but highlighted strong U.S. economic fundamentals, with growth of almost 2% expected in 2019. The U.S. economy grew 2.9% in 2018 from 2017.

Meanwhile, Evans does not expect the Federal Reserve to raise interest rates until the second half of 2020, Reuters reported. The comments follow a dovish pivot from the Fed on March 20, when the central bank kept rates on hold and signaled that the next rate hike may not come until 2020.