When both the Sahm Rule is triggered and the yield curve has recently un-inverted, it significantly increases the probability of an ongoing or imminent recession. The normalization of the 2-year and 10-year Treasury yield curve, where it's no longer inverted, typically signals a shift in economic expectations. Historically, this un-inversion has often preceded economic downturns, contrary to what one might intuitively expect. It may indicate that investors anticipate lower short-term interest rates in the near future, possibly due to expected central bank actions to combat slowing economic growth. While this signal has been a reliable recession predictor in the past, its accuracy in the current economic environment is debated due to unprecedented monetary policies and global economic factors. Markets may react with increased volatility as investors reassess their positions. However, the timing between yield curve normalization and potential economic changes can vary significantly, and other economic indicators should be considered for a more comprehensive outlook. Here's what this might historically indicate and what could be expected:
0 Comments
Leave a Reply. |
Des Woodruff (aka d-seven)
Archives
November 2024
Categories |