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Yield Curve Inversion Current State

Interest-Rates / Inverted Yield Curve Oct 07, 2019 - 04:01 PM GMT

By: Nadeem_Walayat

Interest-Rates

An inverted yield curve is basically when the yield on 2 year US government bond exceeds the 10 year US bond yield as worried investors opt to disinvest from risky assets in favour of safer longer term government bonds thus driving down long bond yields below that of nearer term bonds. And the closer the yield curve gets towards towards an inversion the greater the likelihood for a future recession. So far the yield curve inversion has successfully forecast the last 3 economic downturns in the United States. Though the YCI has proved less reliable elsewhere, especially for Australia.


The Fed put up a valiant effort to prevent a yield curve inversion 'recession indicator' all year finally failing during late August which triggered a barrage of action to immediately reverse the inversion most notable of which was Septembers rate cut. Does anyone recall the Feds rate hike mantra of less than a year earlier? Which illustrates watch what they do rather than what they say.

So US bond long bond yields have risen, though at 0.06. the Fed clearly see's much more work to be done, which means to expect US long bonds to fall in price as the Fed attempts to bring the yield curve spread back into the years range of 0.10 to 0.30, by the Fed engineering lower short-term rates and higher long-term rates which should be a net positive for stocks i.e. favouring risk assets. And not to forget that even if the yield curve inversion does herald a recession, historically it can take 10 - 20 months from inversion for the recession to materialise.

The rest of this analysis that concludes in a detailed trend forecast into the end of 2019 has first been made available to Patrons who support my work. Dow Stock Market Trend Forecast Oct to Dec 2019

  • Stock Market Trend Forecast Current State
  • Yield Curve Inversion Current State
  • US Presidential Cycle 
  • ELLIOTT WAVES 
  • Short-term Trend Analysis
  • Long-term Trend Analysis
  • MACD
  • VIX
  • SEASONAL ANALYSIS
  • Formulating a Stock Market Forecast
  • Dow Stock Market Forecast Conclusion
  • AI Stocks Buying Levels

So for immediate first access to ALL of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $3 per month. https://www.patreon.com/Nadeem_Walayat.

Scheduled Analysis

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By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2019 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Housing Markets Forecast 2014-2018The Stocks Stealth Bull Market 2013 and Beyond EbookThe Stocks Stealth Bull Market Update 2011 EbookThe Interest Rate Mega-Trend EbookThe Inflation Mega-trend Ebook

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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