A growing rash of economists are warning the odds of a recession have increased amid a historic inversion of the yield curve—a telltale sign of a looming economic slowdown after the Federal Reserve on Wednesday raised rates to the highest level since the Great Recession and signaled its policy would be more aggressive than previously anticipated.... [+]Yields on the 10-year Treasury surged more than 10 basis points to nab a new 11 year-high of 3.
Since July the yield curve has been inverted—when short-term yields fall below longer-term returns—in a sign investors are more bearish about the economy's long-term prospects, and the inversion only deepened after the Fed on Wednesdayrates by 75 basis points and suggested it may institute another unusually large hike again in November.
In a note to clients, analyst Tom Essaye of the Sevens Report explained the steepening inversion"makes sense" because a more aggressive Fed, and higher rates that make borrowing more expensive, will temper demand and stunt economic growth in hopes of reducing inflation, but he also warned the magnitude of the inversion has become"very concerning.
In a Friday note, Bank of America economists said they expect the economy will fall into a recession in the first half of next year, with real GDP falling 1% after adding 5% last year, and unemployment rising to 5.6%—potentially wiping out more than a year of job gains.
Housing market will slide off a cliff this month too
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Stop printing money. Stop esg BS. inflation
Gosh, huh? Who saw that comming?
It's not a recession until Czar Joe says so, though.
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