Tuesday, November 29, 2011
Bond Yields Suggest 60% Chance of Recession...
The bond market indicator that has predicted every U.S. recession since 1970 shows that the economy has about a 60% chance of contracting within 12 months.
Short-term rates have been higher than longer-term yields, or inverted, before each of the 7 recessions since 1970.
“The adjusted curve is giving a powerful signal for an upcoming U.S. recession,” said Ruslan Bikbov, a fixed-income strategist in New York at Bank of America, one of the 22 primary dealers of U.S. government securities that trade with the Fed.
“If that happens, the Fed’s target rate could remain near zero beyond 2014,” more than a year longer than the central bank has indicated, he said in an interview on October 3rd.
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I think I missed something... the yield curve is not inverted right now. Short term yields (on short term US Treasuries at least) are at 0% ! Long term yields are definitely more. http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield
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