Inverted Yield Curve

[AZGrizFan]

Technically, the yield curve inverted yesterday (5 yr 1 basis point lower than the 2 year). Yes, just barely, and yes, it’s only one day. Historically since 1970, an inverted yield curve has predicted/preceded EVERY recession by 6-8 months. If the curve continues to invert, it would imply a recession beginning the middle of next year.

JSO must be salivating at the mere thought.

[Ivytalk]

JSO might be conflicted. On the one hand, he might relish the prospect of Drumpf running for re-election in the middle of a recession. On the other hand, it’s the economy.

[Pwns]

Do we even know what a healthy "trade war" economy should look like?

I think it's too early to hit the panic button. With inflation under control and a don't-tax-and-spend Republican in office, things don't look that bad at least for the next several years.

[Winterborn]

Technically, the yield curve inverted yesterday (5 yr 1 basis point lower than the 2 year). Yes, just barely, and yes, it’s only one day. Historically since 1970, an inverted yield curve has predicted/preceded EVERY recession by 6-8 months. If the curve continues to invert, it would imply a recession beginning the middle of next year.

JSO must be salivating at the mere thought.

Interesting. How long did those inversions last in the past? Was it a quick inversion or a steady trend until the recession started?

[CAA Flagship]

Thanks, Yellen.

[ALPHAGRIZ1]

Obamas economy is finally catching up with us

[Skjellyfetti]

a don't-tax-and-spend Republican in office

[dbackjon]

Obamas economy is finally catching up with us

Clueless

[dbackjon]

Do we even know what a healthy "trade war" economy should look like?

I think it's too early to hit the panic button. With inflation under control and a don't-tax-and-spend Republican in office, things don't look that bad at least for the next several years.

[Pwns]

[kalm]

I think they’re reading that as “don’t tax and DON’T spend.

Prolly should have put a “but” in there.

[AZGrizFan]

Technically, the yield curve inverted yesterday (5 yr 1 basis point lower than the 2 year). Yes, just barely, and yes, it’s only one day. Historically since 1970, an inverted yield curve has predicted/preceded EVERY recession by 6-8 months. If the curve continues to invert, it would imply a recession beginning the middle of next year.

JSO must be salivating at the mere thought.

Interesting. How long did those inversions last in the past? Was it a quick inversion or a steady trend until the recession started?

The exact question I asked at our Finance Committee meeting yesterday. The answer is: the inversions weren't "quick", but they also don't typically last until the recession starts. The inversion happens, the curve is inverted for some period of time (weeks-months) and then 6-8 months AFTER the inversion, the recession begins.

Although, many economists and even Fed governors are publicly stating they don't necessarily believe that an inverted yield curve will signal a recession THIS TIME. There's some moving parts in play that have NEVER been in play before: the Fed unwinding of their balance sheet (to the tune of $4.3T), the tariffs battle going on, the stock market going schitzo after hitting an all-time high just 30+ days ago, oil that tanked after hitting 4-year highs in early October, and a president who doesn't seem to understand how ANY of the moving parts work together (or against each other).

Could be an interesting ride. Buckle up, buttercups.

[JohnStOnge]

Technically, the yield curve inverted yesterday (5 yr 1 basis point lower than the 2 year). Yes, just barely, and yes, it’s only one day. Historically since 1970, an inverted yield curve has predicted/preceded EVERY recession by 6-8 months. If the curve continues to invert, it would imply a recession beginning the middle of next year.

JSO must be salivating at the mere thought.

A question is whether there has been a recession every time there is one of those inverted yield curve things. Another question is whether there have been recessions that were NOT preceded by one of those.

[JohnStOnge]

JSO might be conflicted. On the one hand, he might relish the prospect of Drumpf running for re-election in the middle of a recession. On the other hand, it’s the economy.

The economy did not get Trump elected. But I think a factor in that is the fact that the economy wasn't bad during the 2016 campaign. It was doing OK. We were in the 7th year of an economic expansion as well as in the 7th year of a Bull stock market. The unemployment rate was low and in decline. Jobs were being created. Inflation and interest rates were low. Things were a hell of a lot better than they were when Obama took office.

As I've noted before, the economy was doing well enough to cause Trump to feel the need to argue, during the election, that the numbers were "fake."

Having the economy ACTUALLY do poorly during a Presidency when an election is looming is an entirely different thing. I don't think people SHOULD vote on the basis of that. But historically they've done that. If we actually have a recession start during Trump's second term that's going to hurt him.

[JohnStOnge]

I'd never heard of the Yield Curve thing before but in reading about it at https://www.iwillteachyoutoberich.com/b ... eld-curve/ it looks to me like it's just an indicator of perception. Like in this quote:

When it comes to a recession, many investors will start to invest in long-term U.S. Treasury bonds as it approaches — since they know that the interest rates on other assets like stocks will soon drop.

As more and more people begin to buy long-term bonds, however, the Federal Reserve responds by lowering the yield rates for those securities. And since people aren’t buying a lot of short-term U.S. Treasury bonds, the Fed will make those yields higher to attract investors.

The qualification to that, to me, is that nobody really knows that the interest rates on other assets like stocks will drop. It's what they think. It's perception.

That's not to say that we shouldn't take the perceptions of those who make their livings in finances seriously. But it's still perception.

[AZGrizFan]

Technically, the yield curve inverted yesterday (5 yr 1 basis point lower than the 2 year). Yes, just barely, and yes, it’s only one day. Historically since 1970, an inverted yield curve has predicted/preceded EVERY recession by 6-8 months. If the curve continues to invert, it would imply a recession beginning the middle of next year.

JSO must be salivating at the mere thought.

A question is whether there has been a recession every time there is one of those inverted yield curve things. Another question is whether there have been recessions that were NOT preceded by one of those.

Since 1970 the answer to those questions are YES and NO.

[JohnStOnge]

A question is whether there has been a recession every time there is one of those inverted yield curve things. Another question is whether there have been recessions that were NOT preceded by one of those.

Since 1970 the answer to those questions are YES and NO.

Well, if that's true perception has been reality since 1970. But it's an interesting thing. To me the economy is largely a self-fulfilling prophecy type of thing. How well it does it impacted by how well people THINK it will do.

[AZGrizFan]

Since 1970 the answer to those questions are YES and NO.

Well, if that's true perception has been reality since 1970. But it's an interesting thing. To me the economy is largely a self-fulfilling prophecy type of thing. How well it does it impacted by how well people THINK it will do.

No doubt. It’s not a causal relationship. It’s a leading indicator. When the curve inverts, recession is imminent.

Interestingly, many economists and Fed governors are Pooh-poohing the concept this time, thinking we’ll break that 50+ year old trend...guess we shall see in the next 9 months.

[Ivytalk]

JSO might be conflicted. On the one hand, he might relish the prospect of Drumpf running for re-election in the middle of a recession. On the other hand, it’s the economy.

The economy did not get Trump elected. But I think a factor in that is the fact that the economy wasn't bad during the 2016 campaign. It was doing OK. We were in the 7th year of an economic expansion as well as in the 7th year of a Bull stock market. The unemployment rate was low and in decline. Jobs were being created. Inflation and interest rates were low. Things were a hell of a lot better than they were when Obama took office.

As I've noted before, the economy was doing well enough to cause Trump to feel the need to argue, during the election, that the numbers were "fake."

Having the economy ACTUALLY do poorly during a Presidency when an election is looming is an entirely different thing. I don't think people SHOULD vote on the basis of that. But historically they've done that. If we actually have a recession start during Trump's second term that's going to hurt him.

Caught my limit. Guess I’ll pack my fishing gear and go home.

[ALPHAGRIZ1]

Never stop fishing!

WTF is wrong with you? SMFH

Sent from my SM-G955U using Tapatalk

[AZGrizFan]

Never stop fishing!

WTF is wrong with you? SMFH

Sent from my SM-G955U using Tapatalk

Seriously. Nobody likes a quitter.

[CAA Flagship]

Never stop fishing!

WTF is wrong with you? SMFH

Sent from my SM-G955U using Tapatalk

Seriously. Nobody likes a quitter.

phpBB [video]

[SeattleGriz]

Obamas economy is finally catching up with us

I know. After pulling all the levers for Obama to prop up his sub par efforts, they are now putting the levers back to get the settings to normal.