The most accurate indicator of the recession appeared in the US :: Economy :: RBC


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In the United States, the most accurate indicator of the recession

A turnaround in the yield curve occurred in US government bonds, serving as the most reliable indicator of the next recession. The yield on quarterly treasury bills was higher than the yield on ten-year bonds

Photo: Brendan McDermid / Reuters

The yield on US Treasury bonds at three months for the first time since 2007 exceeded ten-year government bond rates. At the end of Friday 22 March, the return on invoices with a three-month deadline was 2.455% per annum compared to 2.442% for 10-year bonds. This is according to Marketwatch.

The three-year and ten-year yield reversal is the most reliable indicator of the next economic recession, according to data from the Federal Reserve Bank of San Francisco.

Rates on US long-term bonds are decreasing due to increased demand for this asset by investors (the price and return on bonds move in different directions). Purchases intensified after the US Federal Reserve lowered forecasts for US economic growth and the key rate this week. Now the Fed does not expect a single rate increase in 2019 (and expects two increases in December). The possible end of the monetary policy restriction cycle was a surprise and caused the departure from riskier assets to safe ones (mainly "long" US government bonds).

The US public debt market showed the first sign of economic recession

"It seems to confirm the concerns about the global economic slowdown. The market is starting to take into consideration the future easing of the Fed's policy against the backdrop of a potential recession," Bloomberg quotes Charles Schwab & Co. Katie Jones.



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