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longest inverted yield curve ever (Patreon)

Published:
2024-09-08 00:02:42
Imported:
2026-06
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Content

Goodbye to the longest inverted yield curve in 791 days!

Looks like rates are coming down fast. Buckle up for what’s next!

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Comments

Ben

In 2019 crypto sold off as rates cut. Not unsurprising to see if this scenario repeats. It takes time for risk on to come back, but it will as history shows. It just depends on how bad (or not) the economy gets to when we get out of it. But to me it could take up to 6 months to see a return to form (this could also be in a week if thing suddenly improve and don't worsen - and also 6 months for me is upper end, I guess 2/3 months). 6 months isn't long anyway, we should all be in for the long term. Going down is just an opportunity I'd say!

lee

Anyone watching gitlab?? James any analysis on gitlab?

Manifest Destiny

I find it helpful to think of the yield curve implications in two parts: (1) what are the circumstances that caused the curve to un-invert (bull vs bear steepening), and (2) is the forward-looking curve positive, neutral or negative for global liquidity. The correlation between yield curve un-inversions and recessions is generally when “something breaks” in the economy and the Fed is forced to slash short term rates, which causes the curve to steepen on a relative basis even if long term rates aren’t moving up. Covid would be the most recent example of this Fed reaction function. Not sure if there is recent precedent for an un-inversion in an era of fiscal dominance though 🤔 Agree with others that no one really knows what this all means for the next six months (except for James maybe) 🤷🏻

DigitalRengade

A lot of mixed messages. Everybody thought lowering rates would be bullish, but the market was bullish in a high interest rate environment. We going to be going even more risk on now, or a looming recession

Testbot#88

Net-net this could be short term negative and longer term positive. One key aspect of un-inverting is that in the short term interest is lower forcing more money out seeking higher returns. This is happening as the Fed is pivoting and global liquidity is increasing. I say short term negative because we must not forget THE REASON why interest rates are dropping. The good thing is the market reacts faster than the economy.

Wicksley Snipes!

Combined w rate cuts, bad jobs reporting etc, could go a lot of ways. (Pot. Bull Case): -More aggressive & accommodative Fed Action -Lower Yields and Higher Valuations -Stimulus Potential -Fed “Put” Mentality (Pot. Bear Case): -Recession Fears Escalate -Consumer Confidence Decline -Credit Markets Tighten -Corporate Layoffs -Stagflation Risk

Wicksley Snipes!

Gosh. Does it matter what one means by “buckle up?” Time spent looking at the data and researching historical implications of the current economic indicators/trends/etc. would serve one much better, no?

Jerome Morrow

Ah fascinating, that sounds right. Yes I’d guess we’ll see a ‘melt up’ here shortly followed by a recession. Thank you for sharing I was not aware that it was after the inversion the recession takes place.