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Bond Yield Curve Points To Major Economic Recession

August 14th, 2019 Comments off

 

Until now, the last time the U.S. Treasury 10-year bond yield dipped below 2-year bonds was in 2007. That event foretold the 2007-08 global economic and financial crisis. This inverted curve has been uncanny in its predictive ability to foretell a near-time arrival of a major recession. Now, in August 2019, we again have an inverted yield curve.

Investors worldwide know the significance of this development. Stock markets, including the Dow Jones, are plummeting by big figures. Is this an overreaction, or a rational response to impending fiscal and economic danger.

The inverted yield curve should not be viewed in isolation. Rather, it should be seen in the context of the escalating trade war between the world’s two largest economies, the growing risk of a hard Brexit, and economic stagnation in Europe.

The warning chimes are growing louder.