Treasuries now make up more than half of the world’s haven assets, double the share they accounted for during the global financial crisis, according to Eurizon SLJ Capital. That complicates matters when the spread between long- and short-term yields inverts: what used to be a reliable American recession indicator is instead an barometer of investors diving for cover worldwide. — Yahoo! Finance
One of the top three recession indicators economists look at to gauge the health of the American economy—the relationship between the various return rates on United States Treasury Bonds—is becoming less a useful metric for those analysts due to the influence of global economic trends, Yahoo! Finance reports.
Yield rates have "inverted" several times in the last few months, a phenomenon typically considered a "leading indicator" of a potential economic recession in the American economy. But economists are increasingly viewing the trend as a sign of global economic weakness—rather than economic weakness in the American economy specifically—as the strength and long-term stability of American Treasury Bonds lures foreign investors fleeing deteriorating global markets. The shift is making predicting the next recession more difficult task.
2 Comments
We couldn't accurately predict the last presidential election. Size, complexity, I suspect, are taking their toll.
History has always been easier to predict :/
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