Inverted Yield Curve Continues, Signaling Recession

by: Roger Nusbaum

Roger Nusbaum submits: Friday's Trade Deficit number came in hot, as has been the case more often than not. The yield curve inversion seems to be getting a little deeper and more persistent.

When the trade deficit will matter is tough to game, but the curve inversion is starting to matter a lot more in its current state that it did a couple of months ago when the two year and five year inverted by 2 basis points for ten minutes.

From CNBC:

2 year 4.64%
5 year 4.53%
10 year 4.51%
30 year 4.47%

Unless this reverses quickly, I have to think that a recession by the end of the year is a real possibility. Keep in mind that nothing is certain but a truly inverted curve results in a recession 83% of the time and the usual lag is in the neighborhood of nine months.

I'd be thrilled if this go around was an exception.

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