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We'll likely have an inverted yield curve before the end of 2018 for sure. Go back in history to see the correlation to past recessions: https://fred.stlouisfe
by kirbypineapple 8y ago
We'll likely have an inverted yield curve before the end of 2018 for sure. Go back in history to see the correlation to past recessions:
https://fred.stlouisfed.org/series/T10Y2Y https://fred.stlouisfed.org/series/T10Y2Y
Obviously it's not as simple as that but it certain implies that something uncommon is happening in the financial markets.
- maxlybbert 8y agohttps://www.federalreserve.gov/econres/notes/feds-notes/dont-fear-the-yield-curve-20180628.htm https://www.federalreserve.gov/econres/notes/feds-notes/dont...
- kirbypineapple 8y agoThanks for this counterpoint, it provides solid context for the data!
- maxlybbert 8y agoIt’s from the Federal Reserve, so people may discount it either from a belief the Fed doesn’t know what it’s doing, or a belief the Fed is biased in how it sees things. But I was happy when it showed up recently. It provides a good explanation about the yield curve and a more specific way to look at things.
- lesss365 8y agoAlso a correlation between low unemployment and past recessions. It's looking pretty grim...
- quotemstr 8y agoOne wonders about the extent to which this correlation is a self-fulfilling prophesy. If everyone gets skittish when indicators look too good and reduce investment, they end up causing the recession that they predict!
- swyx 8y agoreflexivity is a wonderful thing.
- jmalicki 8y agoAn inverted yield curve isn't a random indicator to look for to bet on a recession... rather, it is a sign that the market has bet on a recession. Whether or not the market betting on a recession causes a recession is another question, but it is the skittishness that causes the indicator - so any time you see an inverted yield curve, investors have already become skittish and reduced investment targeted at certain dates.