Economy 53,090 Posted August 21, 2018 Share Posted August 21, 2018 https://www.google.ca/amp/s/www.dailysabah.com/economy/2018/08/21/economists-worried-a-recession-underway-for-us-economy/amp A flattening yield curve has predicted every recession with the exception of 1966 meaning it is not a completely infallible recession forecasters but about the closest to it that exists For a while now the curve on long term rates has been flattening in relation to short term rates which means the market is not expecting rates to keep going up and that is usually due to not expect much more economic growth If an inverted yield curve happens (so far it hasn't) its even worse (where long term rates are lower than short term ones) and means severe downturn is likely coming Inverted yield curves happen when investors expect rates to drop so much that they prefer to lock in a lower rate over a longer term than accept a higher short term rate now that once refinanced might yield them nothing Link to post Share on other sites More sharing options...
Fatigay 21,232 Posted August 21, 2018 Share Posted August 21, 2018 Link to post Share on other sites More sharing options...
MJHolland 12,725 Posted August 21, 2018 Share Posted August 21, 2018 Interesting indeed. Will be watching the bond market closely. With Trump set out to relentlessly overheat the economy, I'm glad we've at least got a pretty hawkish Fed uninterested with unemployment for the moment. Will the yield curve change on these bonds if, say, the Fed continues to increase/or decrease interest rates? (continue to invert, reverse inversion, or no change?) Link to post Share on other sites More sharing options...
MJHolland 12,725 Posted August 21, 2018 Share Posted August 21, 2018 Wish they published their data... Link to post Share on other sites More sharing options...
Economy 53,090 Posted August 21, 2018 Author Share Posted August 21, 2018 12 minutes ago, MJHolland said: Interesting indeed. Will be watching the bond market closely. With Trump set out to relentlessly overheat the economy, I'm glad we've at least got a pretty hawkish Fed uninterested with unemployment for the moment. Will the yield curve change on these bonds if, say, the Fed continues to increase/or decrease interest rates? (continue to invert, reverse inversion, or no change?) Hikes increase all rates but short term rates more. Because it affects credit cost now. The more rates go up the lower the chances rates long term will go up higher to catch up and so long term rates start to not go up as fast if the economy isn't seen growing enough to eventually have rates above a certain level. The further into an expansion, and more mature the business cycle is the flatter the curve tends to get Usually by the end it's pretty close to flat. Inverted yield curve is worse but more rare Link to post Share on other sites More sharing options...
Gladys622 974 Posted August 21, 2018 Share Posted August 21, 2018 So what does this mean in stupid person speak? boom boom cherry Link to post Share on other sites More sharing options...
Economy 53,090 Posted August 21, 2018 Author Share Posted August 21, 2018 12 minutes ago, mmmmmonster said: So what does this mean in stupid person speak? That investors and job creators lack of confidence in longer term economic growth is showing itself in financial market patterns based on the bets they are making Link to post Share on other sites More sharing options...
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