5 ms·

One pretty solid indicator of recessions to the year or two is the inverted yield curve on short and long term yields. From the FRED: 10-Year Treasury Constant

One pretty solid indicator of recessions to the year or two is the inverted yield curve on short and long term yields. From the FRED: 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity (T10Y2Y) [1]. Once it dips and inverts, recession seems fairly consistent. Nothing is ever guaranteed but it is better reliability than most financial media, though the possible inverted yield curve is getting attention [2]. Machines and A.I. run it mostly now though, so game theory is now in their/algorithms hands. We are mere spectators in the speculative simulation. They are definitely watching for an inverted yield curve. [1] https://fred.stlouisfed.org/graph/?g=lFt2 https://fred.stlouisfed.org/graph/?g=lFt2 [2] https://www.bloomberg.com/news/articles/2019-08-05/yield-curve-blares-loudest-u-s-recession-warning-since-2007 https://www.bloomberg.com/news/articles/2019-08-05/yield-cur...

melling 7y ago
I read somewhere that this only seems to be an indicator for the United States. For the rest of the world it has not been a predictor. Unfortunately I can’t remember where I saw the article in the past day or two.
- antupis 7y ago
  German is already entering to recession so the rest eurozone will follow very soon. https://www.theguardian.com/world/2019/aug/07/german-industrial-production-suffers-amid-us-china-tension https://www.theguardian.com/world/2019/aug/07/german-industr... Also Chinas economy is slowing down but the problem is that probably nobody knows how much.
  - noitsnot 7y ago
    There are a number of countries cutting interest rates to attempt to help their slowing economies. https://finance.yahoo.com/news/india-delivers-rare-35-basis-061505034.html https://finance.yahoo.com/news/india-delivers-rare-35-basis-... https://finance.yahoo.com/news/brazil-cuts-rates-6-amid-211813450.html https://finance.yahoo.com/news/brazil-cuts-rates-6-amid-2118...
  - melling 7y ago
    Were German yields inverted 18 months ago? The inverted US yield curve is supposed to predict a US recession. It doesn’t say anything about the rest of the world.
- joncrane 7y ago
  I saw this also. I saw it as a post on The Economist's Instagram. I didn't read the full article.
MaysonL 7y ago
See also the 10-year Treasury minus 3-month Treasury, which seems to do even better at recession indication: https://fred.stlouisfed.org/series/T10Y3M https://fred.stlouisfed.org/series/T10Y3M
- sytelus 7y ago
  I have to say wow! I haven't seen better predictor!! Why do you think this is such a better predictor?
tedd4u 7y ago
If you're interested in more on the yield curve inversion, there are three recent (March [1], August [2], and October [3] 2018) SF Fed Reserve Economic Letters about it: [1] https://www.frbsf.org/economic-research/publications/economic-letter/2018/march/economic-forecasts-with-yield-curve/ https://www.frbsf.org/economic-research/publications/economi... [2] https://www.frbsf.org/economic-research/publications/economic-letter/2018/august/information-in-yield-curve-about-future-recessions/ https://www.frbsf.org/economic-research/publications/economi... [3] https://www.frbsf.org/economic-research/publications/economic-letter/2018/october/slope-of-yield-curve-and-near-term-outlook/ https://www.frbsf.org/economic-research/publications/economi...

melling 7y ago

I read somewhere that this only seems to be an indicator for the United States. For the rest of the world it has not been a predictor. Unfortunately I can’t remember where I saw the article in the past day or two.

antupis 7y ago
German is already entering to recession so the rest eurozone will follow very soon. https://www.theguardian.com/world/2019/aug/07/german-industrial-production-suffers-amid-us-china-tension https://www.theguardian.com/world/2019/aug/07/german-industr... Also Chinas economy is slowing down but the problem is that probably nobody knows how much.
- noitsnot 7y ago
  There are a number of countries cutting interest rates to attempt to help their slowing economies. https://finance.yahoo.com/news/india-delivers-rare-35-basis-061505034.html https://finance.yahoo.com/news/india-delivers-rare-35-basis-... https://finance.yahoo.com/news/brazil-cuts-rates-6-amid-211813450.html https://finance.yahoo.com/news/brazil-cuts-rates-6-amid-2118...
- melling 7y ago
  Were German yields inverted 18 months ago? The inverted US yield curve is supposed to predict a US recession. It doesn’t say anything about the rest of the world.
joncrane 7y ago
I saw this also. I saw it as a post on The Economist's Instagram. I didn't read the full article.

MaysonL 7y ago

See also the 10-year Treasury minus 3-month Treasury, which seems to do even better at recession indication: https://fred.stlouisfed.org/series/T10Y3M https://fred.stlouisfed.org/series/T10Y3M

sytelus 7y ago
I have to say wow! I haven't seen better predictor!! Why do you think this is such a better predictor?

tedd4u 7y ago

If you're interested in more on the yield curve inversion, there are three recent (March [1], August [2], and October [3] 2018) SF Fed Reserve Economic Letters about it: [1] https://www.frbsf.org/economic-research/publications/economic-letter/2018/march/economic-forecasts-with-yield-curve/ https://www.frbsf.org/economic-research/publications/economi... [2] https://www.frbsf.org/economic-research/publications/economic-letter/2018/august/information-in-yield-curve-about-future-recessions/ https://www.frbsf.org/economic-research/publications/economi... [3] https://www.frbsf.org/economic-research/publications/economic-letter/2018/october/slope-of-yield-curve-and-near-term-outlook/ https://www.frbsf.org/economic-research/publications/economi...