The yield “curve”


Varje gång räntekurvan är inverterad i USA händer två saker. 

Först dyker det upp diverse förklaringar till varför denna påtagligt pålitliga recessionssignal just den här gången råkar vara ett falsklarm och att det inte är så mycket att bry sig om. 

Därefter följer en markant inbromsning i den ekonomiska aktiviteten, med tillhörande kraftiga börsfall.

I en ofta citerad artikel från 2018 konstaterade San Francisco Feds ekonomer Michael Bauer och Thomas Mertens att varje amerikansk recession under de senaste 60 åren föregåtts av en inverterad räntekurva och att varje gång räntekurvan varit inverterad har det följts av en lägre ekonomisk aktivitet. 

Bara en gång, i mitten av 1960-talet, var inbromsningen så mild att den inte klassades som en recession. 

Richard Bråse DI 13 Oktober 2023

https://www.di.se/analys/darfor-ska-du-rakna-med-borskrasch/


Here is the current view, with one year ago and two years ago shown for comparison



Yields are supposed to reflect risk, and risk grows with time. The chance something bad will happen in the next 10 years is higher than the chance something equally bad will happen in the next two years. Longer-term bond investors should demand higher yields as compensation for that higher risk. Presently they aren’t, or at least not always.

So far, the full yield curve isn’t inverted, only parts of it. But this is definitely abnormal and combined with everything else we know, it’s a ringing alarm bell. The more inverted the yield curve is and the longer it stays that way, the more confident we are that a recession is coming.

In a true inversion we would see the entire curve angled down from left to right. That last happened in 2005. Were we in recession then? No, not at all. The economy was booming. In fact, the yield curve stayed inverted until mid-2007. 

Some of us saw cracks forming in the economy, and said so at the time. But the actual recession would not begin until December 2007.

I began to predict a recession in late 2006.

John Mauldin April 1, 2022



Breathtaking Flattening Speed Includes Major Inversions

The speed at which this happened is stunning. 

At the beginning of the year the spread between the 3-year treasury note and the 30-year long bond was 97 basis points (0.97 percentage points). That spread is now negative 14 basis points, a significant inversion. 

Mish 1 April 2022

 

Why the Yield Curve Is Flattening (And What That Means)







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