5 Systemic Alarm Bells You Need To Know As Credit Suisse Fails
Credit Suisse has failed and been rescued. This may have prevented an immediate crisis, but danger remains.
Here are five alarm bells that are ringing loudly.
What Is The Yield Curve? Why Is It Important? 10
The yield curve’s ability to absorb and distill complex global market interactions, while still acting as an early warning system is what makes it invaluable.
What Is The Yield Curve? Why Is It Important? 9
Let’s conclude our discussion on the yield curve with the role of central banks. Where is the Fed, and it’s supposed control over interest rates in all of this?
What Is The Yield Curve? Why Is It Important? 8
The second reason the yield curve can’t tell us the depth of a future recession is because of external shocks and their unpredictable compounding effects.
What Is The Yield Curve? Why Is It Important? 7
The yield curve cannot tell us the depth of a recession because the bond market doesn’t know if authorities will intervene, or if their interventions will work.
What Is The Yield Curve? Why Is It Important? 6
An inverted yield curve signal that demand for short term borrowing is high – there is a shortage of money. Why is it so hard to alleviate this?
What Is The Yield Curve? Why Is It Important? 5
Now that we know what the shape of the yield curve represents & why, we can answer the question asked in Part 1. Why can’t it tell us the depth of a recession?
What Is The Yield Curve? Why Is It Important? 4
The shape of the yield curve changes as a result of an increase in demand for collateral, even as its supply falls in the open market due to hoarding.
What Is The Yield Curve? Why Is It Important? 3
When times aren’t “normal”, the shape of the yield curve changes, which is why it is so closely watched by market participants. How and why does it change?
What Is The Yield Curve? Why Is It Important? 2
Before we can answer why the yield curve doesn’t indicate how serious a future recession can be, we need to understand what the shape of the curve represents.
