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>Either they are an indicator or they aren't. Because after the inversion the market (and Fed) reacted? No indicator is infallible or static.
by aguyfromnb 7y ago
>Either they are an indicator or they aren't.
Because after the inversion the market (and Fed) reacted? No indicator is infallible or static.
- rtkwe 7y agoI've been skeptical of the whole yield curve as metric thing because it's not directly tied to the actual state of the economy directly just to the sentiment about the market X years in the future. Given how much we know the whole market is prone to group think, self delusion, and outright manipulation I've grown very skeptical of any indicator about the market that comes directly from the market.
- prmph 7y agoBut the actual economy _is_ still about sentiment, no?
- jakeinspace 7y agoFrom consumers and suppliers (to some degree), not so much from buyers of treasury notes.
- rtkwe 7y agoIn most places yeah which is why the kind of highly instrumented self reflection of the sentiment like the yield curve inversion can be dangerous. It's not a sign that says there's going to be a recession it's just a sign the people in that market think there will be one.
- gmtx725 7y agoI always wonder how much of a self-fulfilling prophecy it is, especially now the yield-curve-inversions-precede-recessions thing is so well known, i.e. people see the yield curve inverts and therefore believe the market will drop, therefore it does. Markets are just a reflection of aggregate human beliefs after all.