There's been a fair bit of talk about a pending US recession. Much of this chatter has been fueled by simple analysis of the slope of the yield curve, which is widely viewed as a strong predictor of recession. What this analysis doesn't do, however, is provide any information on the timing of when a recession might occur. The fixed income team at Schroders have developed a 24-point model that combines a range of indicators each with a 'best-fit' of time to a recession. In this short video Stuart Dear, Deputy Head of Fixed Income at Schroders Australia, provides an example of how their recession modelling works and explains what it is telling them right now.
You can read further insights and analysis from Schroders Fixed Income team here
Recession. Recession. You guys live in hope for a disaster. We will have an end to the bull run. But a recession, crazy!
I'd say that was a pretty non-alarmist commentary Mike. 6 out of 24 of their indicators isn't exactly calling a disaster. We get lots of people asking about how to measure risks so they can think about how and when they might need to make changes in their portfolios.
The stockmarket will normally fall some time before the recession. I am more interested in that, than the timing of recession itself. Does the model help in predicting that ?