Travel to Financial Success

Figure 1.  Percent of 10-Yield Curve Inverted (Courtesy: Real Investment Advice ) The inversion of the yield curve is typically seen to herald a recession , as investors switch money to longer-term bonds due to pessimism over the economic outlook. Those fears are growing as policy makers around the world pledge further monetary tightening to tame rising consumer prices. When the number of  inverted yield curves  exceeds 60%,  as it is today (i.e., Nov 2022),  a recession in the US is coming soon (see  Figure 1 ). History shows us that the Fed  hasn’t been able to conclude its hiking cycle  any time  before inflation-adjusted policy rates reached a full 200 basis points.  For the record, that rate is now (i.e., on 11/25/2022) -90 basis points. [48] Video 1.   Possibility of a Soft Landing (YouTube  link ) Recession Watch Over the weekend of 12/03/2022, Bloomberg commented that: Fed staff have put chances of a recession at...

A yield curve inverts when long-term interest rates drop below short-term rates, indicating that investors are moving money away from short-term bonds and into long-term ones. This suggests that the market as a whole is becoming more pessimistic about the economic prospects for the near future . When looking at inverted yield curve, it can be any pair of long-term interest rates and short-term interest rates. In this article, we will look at the inverted yield curve between 10-year and 2-year treasury bond yields . Figure 1.  SPY Monthly Chart (Courtesy: stockcharts.com) Inverted Yield Curve Precedes the Recession The Fed's ongoing rate hiking will eventually trigger the next recession. Historically, an inverted yield curve - the difference between 10-year and 2-year bond yields - has been one of the single-best leading indicators of an impending downturn . Figure 2. Inverted Yield Curve Precedes the Recession The Slope of the Yield Curve Conceptually, the slope of the yield c...

A yield curve inverts when long-term interest rates drop below short-term rates, indicating that investors are moving money away from short-term bonds and into long-term ones. This suggests that the market as a whole is becoming more pessimistic about the economic prospects for the near future . When looking at inverted yield curve, it can be any pair of long-term interest rates and short-term interest rates. In this article, we will look at the inverted yield curve between 30-year and 10-year treasury bond yields . Inverted Yield Curve Precedes the Recession The Fed's ongoing rate hiking will eventually trigger the next recession. Historically, an inverted yield curve - the difference between 10-year and 2-year bond yields - has been one of the single-best leading indicators of an impending downturn . Figure 1. Inverted Yield Curve Precedes the Recession The Slope of the Yield Curve Conceptually, the slope of the yield curve is a rough approximation of the stance of U.S. mo...

When will stocks peak out?  That's the million dollar investment question. Based on The Mad Hedge Fund Trader , who has 12,098 followers on Seeking Alpha , his predication of stock top could be on: Friday, May 10, 2019 at 4:00 PM EST His predication is based on the following reasoning: Inverted yield curve could be created in December 2018 Assume that the Fed continues “normalizing” interest rates by raising 25 basis points a quarter for the next five quarters. This has a recession beginning 14 months after the December 15, 2018 Fed meeting, or February 2020 . Over the past 100 years, inverted yield curves have had an average life of 14 months, within a range of nine to 19 months . Historically, stock markets peak exactly 7.2 months before a recession , so this takes us back to August 2019 . Back out three more months for a “ Sell in May and go away ” effect Bear markets usually begin on Black Mondays Because investors are prone to digest deteriorating ...