Economy 53,090 Posted September 21, 2018 Share Posted September 21, 2018 https://www.google.ca/amp/s/www.cnbc.com/amp/2018/09/21/us-bonds-and-fixed-income-fresh-economic-data-due.html A flattening yield curve as previously discussed tends to signal that the business cycle is near its end and a Recession typically follows. The only time this was ever wrong was in 1966 when an inverted yield curve (worse than flat yield curve) turned out to give a false alarm. Every other recession was accurately forecasted with a flat yield curve US 2 year debt bonds are trading at 2.813% while 10 year bonds are at 3.074% less than a 20 basis point difference the lowest since August 2007 This signals that investors do not demand much higher rates for long term debt as they believe interest rates will fall soon and it's better to lock into long term rates even if there's barely a premium for it It also makes it less desirable for lenders such as banks to lend if their long term loans pay back little more than what they must borrow short term to lend often affecting credit availability Link to post Share on other sites More sharing options...
Guest Posted September 21, 2018 Share Posted September 21, 2018 Well an episode of the simpsons with Trump presidency predicted an economic crash so I believe it Always trust The Simpsons Link to post Share on other sites More sharing options...
ShockPop 7,747 Posted September 21, 2018 Share Posted September 21, 2018 Sometimes Trump = turd. Link to post Share on other sites More sharing options...
Economy 53,090 Posted September 21, 2018 Author Share Posted September 21, 2018 19 minutes ago, ShockPop said: Sometimes Trump = turd. I fail to see the connection Link to post Share on other sites More sharing options...
rumours 45,521 Posted September 21, 2018 Share Posted September 21, 2018 Yep, the yield curve right now is SO ****ing scary. Some of my friends who have graduated work in Public Finance have been expressing concern for a while now. We are overdue for a recession, though. Let’s just hope that when (not if) it happens, it will be far less severe than 07-08. Link to post Share on other sites More sharing options...
Economy 53,090 Posted September 21, 2018 Author Share Posted September 21, 2018 3 minutes ago, Rumours1977 said: Yep, the yield curve right now is SO ****ing scary. Some of my friends who have graduated work in Public Finance have been expressing concern for a while now. We are overdue for a recession, though. Let’s just hope that when (not if) it happens, it will be far less severe than 07-08. I think the overall imbalances this time around like consumer debt and housing market are less severe than in 2007 (exept maybe the stock market valuations) But the issue is we got less amunition to fight one this time around as fiscal and monetary policy has been exhausted Link to post Share on other sites More sharing options...
Born Brave 2,072 Posted September 21, 2018 Share Posted September 21, 2018 1 minute ago, Economy said: I think the overall imbalances this time around are less severe than in 2007 (exept maybe the stock market) But the issue is we got less amunition to fight one this time around as fiscal and monetary policy has been exhausted By exhausted you mean the wealth being controlled by a select 3 percent of the country. Link to post Share on other sites More sharing options...
Economy 53,090 Posted September 21, 2018 Author Share Posted September 21, 2018 2 minutes ago, Born2BeBrave said: By exhausted you mean the wealth being controlled by a select 3 percent of the country. That's not exactly what I was referring to Income inequality is a serious issue but it's a different issue to what I was referring to Link to post Share on other sites More sharing options...
rumours 45,521 Posted September 21, 2018 Share Posted September 21, 2018 5 minutes ago, Economy said: I think the overall imbalances this time around are less severe than in 2007 (exept maybe the stock market) But the issue is we got less amunition to fight one this time around as fiscal and monetary policy has been exhausted Don’t even get me started on the prolonged dovish nature by the Federal Reserve. 3 minutes ago, Born2BeBrave said: By exhausted you mean the wealth being controlled by a select 3 percent of the country. In terms of monetary policy, I believe he is referring to the Fed’s behavior (Federal Funds Rate, etc.). It’s why (in my opinion) a lot of the supposed growth that occurred during the Obama was bs (in terms of magnitude). Link to post Share on other sites More sharing options...
Economy 53,090 Posted September 21, 2018 Author Share Posted September 21, 2018 7 minutes ago, Rumours1977 said: Don’t even get me started on the prolonged dovish nature by the Federal Reserve. In terms of monetary policy, I believe he is referring to the Fed’s behavior (Federal Funds Rate, etc.). It’s why (in my opinion) a lot of the supposed growth that occurred during the Obama was bs (in terms of magnitude). I was. The fact that rates were so low and so long. I'm also refering to the quantitative easing. It leaves little room for cuts now Tho Interestingly now, Canada and the US are the only major economies that have started raising rates. No one else has in the major economy world It's still too low tho to make a difference if we had a recession now and had to cut rates tho Here in Canada our housing market and consumer debt is even more imbalanced than the US in 2007 Link to post Share on other sites More sharing options...
Woolfsmck 2,763 Posted September 21, 2018 Share Posted September 21, 2018 1 hour ago, Economy said: I think the overall imbalances this time around like consumer debt and housing market are less severe than in 2007 (exept maybe the stock market valuations) But the issue is we got less amunition to fight one this time around as fiscal and monetary policy has been exhausted Also, New bank regulations regarding capital to debt ratio will lessen the chance of a credit panic, which all short term lending between banks stops. The probably of a soft landing and restart when trade issues are solved is pretty good imho... like a cat in a sil, I observe life, moving and still. My words give a clue,look inside to see whats true Link to post Share on other sites More sharing options...
rumours 45,521 Posted September 21, 2018 Share Posted September 21, 2018 1 hour ago, Economy said: It's still too low tho to make a difference if we had a recession now and had to cut rates tho Yep. That’s why prolonged quantitative easing can be such a detrimental choice. I’m hoping the recessionary pressures take a little longer to hit just so the rates will be as high as possible when it happens. However, the Fed’s current plan for rates hikes would mean that the recession would have to hit pretty far in the future for the Fed to have sufficient power (in terms of rate adjustments) to make much of a difference imo. Link to post Share on other sites More sharing options...
Economy 53,090 Posted September 21, 2018 Author Share Posted September 21, 2018 1 hour ago, Rumours1977 said: Yep. That’s why prolonged quantitative easing can be such a detrimental choice. I’m hoping the recessionary pressures take a little longer to hit just so the rates will be as high as possible when it happens. However, the Fed’s current plan for rates hikes would mean that the recession would have to hit pretty far in the future for the Fed to have sufficient power (in terms of rate adjustments) to make much of a difference imo. Yeah. And I don't see it coming any later than 2020 latest At least it doesn't look like the recession would be as severe as the last one. But less amunition to fight it could mean it will once again be prolonged In North America at least our monetary policy in going in the right direction In the EU, UK, Japan etc its not budging and stuck at near 0%. I'm not certain about China but I think they've also been lowering it last few years but at least theirs still has room to drop Link to post Share on other sites More sharing options...
Economy 53,090 Posted September 21, 2018 Author Share Posted September 21, 2018 1 hour ago, Woolfsmck said: Also, New bank regulations regarding capital to debt ratio will lessen the chance of a credit panic, which all short term lending between banks stops. The probably of a soft landing and restart when trade issues are solved is pretty good imho... Agreed that fundamentally the housing market, consumer finances and other major eccesses like new cars on road etc are not at the level of 2006/2007 that lead to a huge crash (although very high stock valuations are a concern) But in the flip side recessions usually get a helping hand from lower rates or stimulus to help fight it and prevent a downward spiral from going too far This time around rates can't go much lower since they are still so low and most governments are too broke for any significant fiscal stimulus. So on that end hands are a little tied Link to post Share on other sites More sharing options...
Chuckles 2,549 Posted September 22, 2018 Share Posted September 22, 2018 I wish I could understand what y'all are discussing Is there somewhere I can read about this? Link to post Share on other sites More sharing options...
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