≈ Unpredictable times ahead. ≈
It has been nearly 10-years since the last recession. Amid one of the longest spans of economic expansion in history, there are some that cannot even remember what a recession looks like. Yet for the first time in seemingly forever people are starting to talk about the R-word and the possibility that one might be coming.
On Friday we experienced an inverted yield curve. An inverted yield curve is when interest rates on short-term loans are higher than on long-term loans. On Friday the U.S. Treasury yield curve inverted with 10-year yields falling below 3-month notes for the first time since 2007. This inverted yield-curve is widely viewed as the most predictable recessionary gauge there is. In fact, before each of the last seven recessions the yield curve inverted. The market predictably freaked out on Friday when this occurred.
Will the market continue to freak out? Trying to gauge investor emotion is a difficult task. One thing for certain is that economic data will likely be viewed with a microscope like it hasn’t been in some time. Good data will create bullish upswings one day and bad economic data could cause reversals the next. We are likely in for some choppy price movement in what might be the most difficult trading environment to predict in the last year.
Chart of the Day
Eyes on Future
Futures point to a lower opening this morning as fears of slowing global growth weigh on the minds of traders. A close below the 20-day moving average is possible for just the third time since early January.
Video of the day
What is Inflation
Inflation is the sustained increase in the prices of goods and services over time. It is a quantitative measure generally expressed as a percentage. Inflation indicates a decrease in the purchasing power of each unit of a nation’s currency.
Today’s line up
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