Bond market rebound is bad news for the economy: Gary Shilling - BNN Bloomberg

The good news is that yields in US Treasury securities may be near their peak. The bad news is that makes the recession I’ve been forecasting since February more likely.

The 10-year note yield peaked at 3.48 per cent on June 14, the highest since 2011. It has since fallen back to around 3.22 per cent. The yield jumped from 2.18 per cent on March 16, when the Fed first raised its reference rate from a range of zero to 0.25 per cent to a range of 0.25 per cent to 0.5 per cent . The 1.30-percentage-point jump in the 10-year yield implies a 3.5-percentage point rise in the funds rate, which would bring it close to 4 per cent.

A similar lead may occur this year. Retailers are chopping orders in response to excessive inventories after incorrectly anticipating huge holiday sales at the end of 2021 to American consumers who were already saturated with goods. Consumers have since switched to spending money on services such as dining out and travel. Some 0.8 percentage point of the 1.

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