yield curve


The Inverted Yield Curve, A Warning, Not An Alarm Bell

A&G | Last week we saw the US 2 year rate move above the 10 year rate. We refer to this phenomenon as a yield curve inversion and it has historically been a leading indicator of recessions, but a very leading indicator. We should bear in mind that the sample is very small, as we only have data for 10 recessions and all 10 have been preceded by an inverted…

The Fed balance sheet and repo facility cannot explain the stock market’s movement in isolation

Risks are rising, but recession in the eurozone is not expected

Johannes Müller (DWS) | Three months ago, we warned that: “The outlook for the world economy is getting cloudier. Escalating trade tensions could trigger further downgrades.” Sadly, this has now come to pass. In several export-oriented economies, notably Germany and Japan, we had to cut our growth forecasts for both 2019 and 2020. For the U.S., we have left our 2020 forecast unchanged at 2%, but now expect just 2.3% for 2019, 0.2% less than three months ago.

US yield curve inverts

Economy on alert: US yield curve inverts

Keith Wade, chief economist at Schroders │ The yield curve has been a reliable element in the prediction of US recessions over the last four decades. With only one exception, every time the curve has inverted, the US economy has entered into recession within 18 months.


No need to fear the inversion of the yield curve

Jeroen Blokland (Robeco) | The yield curve for US 10 year/ 3 month Trasury bonds inverted in March. This phenomenon has accurately predicted the last seven recessions. However, analysis shows that is does not cause extreme variations in returns on assets.