Inverted Yield Curve

cawacko

cawacko

Well-known member
The 2yr/10yr yield curve briefly inverted yesterday. Since 1955 the yield curve has inverted before every recession. Doesn't necessarily mean a recession is imminent, I read the medium lag is around 20 months. Nor does it mean a recession is guaranteed, there has a been a false positive previously and there are some people arguing "this time it's different." But for followers of the economy and the market the inverted yield curve is big news.
 
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The bond market just flashed a warning sign that has correctly predicted almost every
New York (CNN Business)The bond market just flashed a warning sign that has correctly predicted almost every recession over the past 60 years: an inversion of the US Treasury note yield curve.
An inverted yield curve is often seen as a signal that investors are more nervous about the immediate future than the longer term, spurring interest rates on short-term bonds to move higher than those paid on long-term bonds.
The curve inverted briefly Tuesday for the first time since September 2019. That shouldn't be particularly surprising, given how Russia's invasion of Ukraine -- and its economic ramifications -- continue to weigh heavily on the global economy.
https://www.cnn.com/2022/03/29/economy/inverted-yield-curve/index.html
 
cawacko said:
The 2yr/10yr yield curve briefly inverted yesterday. Since 1955 the yield curve has inverted before every recession. Doesn't necessarily mean a recession is imminent, I read the medium lag is around 20 months. Nor does it mean a recession is guaranteed, there has a been a false positive previously and there are some people arguing "this time it's different." But for followers of the economy and the market the inverted yield curve is big news.
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So, Gold?
 
cawacko said:
The 2yr/10yr yield curve briefly inverted yesterday. Since 1955 the yield curve has inverted before every recession. Doesn't necessarily mean a recession is imminent, I read the medium lag is around 20 months. Nor does it mean a recession is guaranteed, there has a been a false positive previously and there are some people arguing "this time it's different." But for followers of the economy and the market and inverted yield curve is big news.
Click to expand...

There is a Presidential election before every recession. While there have been false positives it is true that a Presidential election preceded every recession since 1789 which means it has been an indicator much longer than the inverted yield curve.

Another interesting note is that since 1950, 10 of the 11 recessions have started while a Republican was President so Republicans were in the office for over 90% of the recessions while only holding the office 55% of the time.

Anyone that tells you that a particular signal shows the market will do something will be right about 50% of the time. You might as well flip a coin.
 
Phantasmal said:
The economy is naturally going to cool as we return to normal or the new normal, anyway.
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I am mostly out, by virtue of my money largely being in a big project I am working on, so I am hoping for a huge drop in the market in the next two years, so I can buy back low.
 
Jarod said:
I am mostly out, by virtue of my money largely being in a big project I am working on, so I am hoping for a huge drop in the market in the next two years, so I can buy back low.
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How compassionate of you.

You and Policrapper should be buddies.




Polltaker:

"Dive, market, DIVE!

Take DT down with you.


02-28-2020, 06:47 AM #5 | Top
PoliTalker


"Sometimes things have to get worse before they can get better.

We're going down.

BZZZZZT! BZZZZZT! BZZZZZT!

Dive! Dive! Dive!"
 
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Poor Richard Saunders said:
There is a Presidential election before every recession. While there have been false positives it is true that a Presidential election preceded every recession since 1789 which means it has been an indicator much longer than the inverted yield curve.

Another interesting note is that since 1950, 10 of the 11 recessions have started while a Republican was President so Republicans were in the office for over 90% of the recessions while only holding the office 55% of the time.

Anyone that tells you that a particular signal shows the market will do something will be right about 50% of the time. You might as well flip a coin.
Click to expand...

I will never present myself as some type of investment guru however I’m not aware of anyone saying equities will perform in a certain way as a result of the yield curve inverting.

Based on your first sentence I take it you don’t read anything into the inverted yield curve. Why do you think so many others do and it gets the attention it receives?
 
Otra vez:


The bond market just flashed a warning sign that has correctly predicted almost every
New York (CNN Business)The bond market just flashed a warning sign that has correctly predicted almost every recession over the past 60 years: an inversion of the US Treasury note yield curve.
An inverted yield curve is often seen as a signal that investors are more nervous about the immediate future than the longer term, spurring interest rates on short-term bonds to move higher than those paid on long-term bonds.
The curve inverted briefly Tuesday for the first time since September 2019. That shouldn't be particularly surprising, given how Russia's invasion of Ukraine -- and its economic ramifications -- continue to weigh heavily on the global economy.
https://www.cnn.com/2022/03/29/econo...rve/index.html
 
Jarod said:
I am mostly out, by virtue of my money largely being in a big project I am working on, so I am hoping for a huge drop in the market in the next two years, so I can buy back low.
Click to expand...

I have a brother that has been saying that for ... 10 years now. :(
 
Earl said:
The new normal appears to be a recession.
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Just the normal Business Cycle seems to call for a downturn. The Market has had such a huge run.
1. 'Dead cat bounce'. I hear this term tossed around.
2. Russia/Ukraine War. Even if this ends, there is still a long term problem.
3. 'ETFs'. Allowing anyone/everyone to enter the Market.
4. China. The Rising Power in the World.
5. 'Inflation'.
6. Political division within the US.

It's difficult to see how the Market and continued Growth are on the horizon.
 
Jack said:
Just the normal Business Cycle seems to call for a downturn. The Market has had such a huge run.
1. 'Dead cat bounce'. I hear this term tossed around.
2. Russia/Ukraine War. Even if this ends, there is still a long term problem.
3. 'ETFs'. Allowing anyone/everyone to enter the Market.
4. China. The Rising Power in the World.
5. 'Inflation'.
6. Political division within the US.

It's difficult to see how the Market and continued Growth are on the horizon.
Click to expand...

There are population shifts too. Millions of illegals, hundreds of thousands of Ukrainians and Afghans. All must be fed, educated and provided medical care.

Should we be thinking “depression,” Jack?
 
Phantasmal said:
Just what it says. I never wish for the market to fail so I can profit, that’s Trumpian.
Click to expand...

No, it’s Policrapper.

Polltaker:

"Dive, market, DIVE!

Take DT down with you.


02-28-2020, 06:47 AM #5 | Top
PoliTalker


"Sometimes things have to get worse before they can get better.

We're going down.

BZZZZZT! BZZZZZT! BZZZZZT!

Dive! Dive! Dive!"
 
Earl said:
There are population shifts too. Millions of illegals, hundreds of thousands of Ukrainians and Afghans. All must be fed, educated and provided medical care.

Should we be thinking “depression,” Jack?
Click to expand...

Recession ... when a lot of people are out of work.
Depression ... when YOU are out of work.
www. cheech&chong. com
 
cawacko said:
I will never present myself as some type of investment guru however I’m not aware of anyone saying equities will perform in a certain way as a result of the yield curve inverting.

Based on your first sentence I take it you don’t read anything into the inverted yield curve. Why do you think so many others do and it gets the attention it receives?
Click to expand...

I knew all about the inverted yield curve years ago. It will supposedly result in a recession anytime in the next 6-36 months. Gosh. Recessions happen about every 5-7 years. That means that any yield curve inversion has about an 80% chance of seeing a recession within that 36 months. Factor in what actually causes a yield curve inversion to only occur long after a recession and you get close to a 100% chance that a recession will occur within 36 months.

Markets fluctuate. Recessions happen. Trying to tie the two together is a fool's game. The markets are filled with professionals that are nothing more than fools that are selling their expertise. You should watch the yearly predictions from those professionals and then see how they did at the end of the year.
 
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