What Are 2 Of The World’s Most Important Markets Saying?
The summer rally in US equities has gotten folks bullish again.
But, from a broader perspective, it looks as if equities are fighting the bullish battle alone.
The summer rally in US equities has gotten folks bullish again.
But, from a broader perspective, it looks as if equities are fighting the bullish battle alone.
Summer rallies have brought some relief to markets, but we aren’t out of the woods yet.
These 3 markets will give some indication of how things may play out.
Markets have been making it very clear that all is not well in the global economy. What does this mean for your portfolio, and how should you position yourself?
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.
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?
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.
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.
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?
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?
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.