Is an economic recession coming in the United States?

Higher returns in the short term than in the long term are considered abnormal and reinforce expectations of a slowdown in growth.

The yield on US 2-year Treasury bonds on Tuesday exceeded the 10-year yield for the first time since 2019, inverting another slice of the Treasury curve and reinforcing the view that the A Federal Reserve rate increase could cause a recession.

The reversal came as 2-year bond yields rose while 10-year bond yields fell, surpassing the 2.39% level. Prior to 2019, when the curve reversed in August during the US-China trade dispute, the last sustained reversal of the Treasury curve occurred in 2006-2007.

It may interest you: Powell says the Fed is willing to raise the rate by half a percentage point in May if needed to contain inflation

Short-term returns are higher than long-term ones abnormal, noting that high levels of short-term returns are unlikely to persist as growth slows. The reversal of the 2- to 10-year portion of the Treasury curve is the latest in a series that began in October, when 20-year yields outperformed 30-year yields. In the past month, the investment has reached segments of seven to ten years and five to seven years, among others.

There is not always a recession when the curve reverses, but “historically, There was no recession without investment.”says Ben Emmons, global macro strategist at Medley Global Advisors LLC. “It is very likely to predict a recession in the future. However, the timing is unknown. It could be up to two years.”


See also  Ortega in Nicaragua says that China will be the leading economy in the world, not the United States


Aileen Morales

"Beer nerd. Food fanatic. Alcohol scholar. Tv practitioner. Writer. Troublemaker. Falls down a lot."

Leave a Reply

Your email address will not be published.

Back to top