A closely watched section of the Treasury yield curve on Friday turned negative for the first time since the crisis more than a decade ago, underscoring concern about a possible economic slump and the prospect that the Federal Reserve will have to cut interest rates.
The gap between the 3-month and 10-year yields vanished on Friday as a surge of buying pushed long-end rates sharply lower. Inversion is widely considered a reliable harbinger of recession in the U.S. The 10-year slipped to as low as 2.439 percent.
Look out below! It’s time to watch The Big Short again.
I’ve got no sympathy for Central Bankers. One of these days, people will come after them with pitchforks and torches. But they’ll try to kick the can down the road, hoping against hope that it’ll be their successors rather than them that end up paying with their lives.
So much for unloading its balance sheet of toxic debt. The Federal Reserve looks like it may try the desperate move of shifting gears and lowering short-term rates. Might they even go full-gonzo insane and go to negative rates like some other sovereign bonds have done? Pump helicopter money into the economy?
Expect deficit spending to explode. And the teetering economy to stare into the abyss. How can equities possibly do well in that universe? Time to re-balance your 401(k), shifting towards cash? Load up on gold, silver, and crypto?
Disclaimer: This should not be construed as financial advice. I am not a registered financial advisor; I don’t even play one on TV. Do your own due diligence. Batteries not included. Objects may be larger than the appear in mirror. Some assembly required. Do not taunt Happy Fun Ball.
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I'd load up on skills and supplies first though if people don't already have them.
Good point.
I can already smell and taste the recession in the air, 3-4 more years max, the tipping point will be student loans defaulting... 2008 all over again if not worse, #shortthebankers! You said it, let's start stacking cryptos and gold!
Remember that markets can remain irrational for extended periods of time; especially if supported by the Central Bank!
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Yeah, I suppose the Fed could start openly buying equities like the Bank of Japan does.
I am sure that US govt will never run out of tricks to fix it @preparedwombat
Well they can certainly paper things over for as long as the USD is the world’s reserve currency. But if the petrodollar exceptionalism system starts to really unravel, things could get dicey.