There’s been a lot of talk of inverted yield curves in the US and whether they portend a recession or a stock market crash. But, I wonder whether we need to watch the yield curve as much as exuberance in stocks themselves?US yield curve inversionCurrently about 3/5ths of the US... Show More
Let’s start by reviewing what the yield curve actually is. Consider a range of durations for government notes, for example, you can have 3-month notes, 1-year notes, 2-year notes and so on up to 30-year bonds and notes. Show More
Looking at news headlines, there seems to be a growing consensus of an impending recession by 2020. To support this view, many have pointed towards a flattening yield curve. But James Sweeney, chief economist at Credit Suisse says otherwise. “My view is that we're not likely to have a new... Show More
The gold price in USD fell by 3% in the first half of August, declining below critical support at USD $1200oz, though it has since bounced back above this level. The savage sell off represented the culmination of a four month drawdown for the yellow metal, with the gold price... Show More
The most important factor driving bond markets is the direction of global Central Bank short-term interest rates, as many of them are attempting to normalise rates in a post GFC era. The challenge is to achieve this without roiling capital markets, as we are late in the global business cycle,... Show More
One of most reliable early warning indicators of an impending equity bear market is the shape of the US yield curve. When short-term interest rates are higher than long bond yields, it is a sign that monetary policy is tight enough to choke off growth in the economy and company... Show More
Sector rotation in the US equity market over the past month has been driven by a combination of rising bond yields, stronger US economic growth and political risks going into Tuesday’s US Presidential and Congressional elections. The chart shows the performance over the past month of the 10 sectors that comprise... Show More
