Recession: Are past results useful indicators of future performance?
Consider A Recessions Length When Compared to the ‘Real Rates’ of Bonds on the Day the Treasury Yield Curve Inverts…
The current scenario does not bode well for the U.S. economy!
(Note:
– An inverted yield curve exists when longer-term interest rates are lower than near-term rates.
– Real Rates are the bond’s yield – the inflation rate)
‘Fed researchers found ‘the length and severity of a recession was *inversely* correlated to the REAL 10-Year US treasury yield at the time of the yield curve inversion. i.e. the lower the real 10-Year US Treasury yield at the time of the inversion, the worse the recession.
In our current case, the real rate of the 10-year treasury (yield minus inflation) was a MINUS 5% at the time the yield curve inverted. In the prior cases, it had never been negative.’
This would indicate the economy is facing a difficult road ahead! (Puru Saxena https://twitter.com/saxena_puru/status/1604431239481413632
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That’s the bad news, but if you’re buying commercial or residential real estate in New York there is some good news…
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