Not much time.
Since early July, the 30-year US Treasury Bond Price Index has plunged 8.3%. It’s now called “the rout” in longer-dated government bonds. One of the specters is rising inflation at a time of ultra-low yields.
What has become the number one predictor of a bear market in stocks over the past many decades? The US Treasury yield curve. It drives bank lending – which can strangle the economy. But this time, the risks are much higher, and the potential economic consequences steeper.
The yield curve depicts the yields of different maturities of Treasury securities. Normally, those with short maturities have very low yields, and those with longer maturities have higher yields.
Here’s Christine Hughes, Chief Investment Strategist at OtterWood Capital, with a look at the yield curve, trying to determine how much longer we have until the next economic crisis. Her conclusion: not very long:
So why is this economy not yet in a recession with data like this? Read… What’s Really Different this Time: Business Investment Drops to Lowest September since 2010