Wall Street Red Flag: A Bond Market Indicator That Has Predicted Every Recession in The Last 50 Years Just Got Triggered
The comments below are an edited and abridged synopsis of an article by Michael Snyder
If the bond market is correct, the US economy is heading into a recession. Over the past 50 years, there have been six occasions when 3-month Treasury yields have risen above 10-year Treasury yields and a recession has followed. Now it has happened again, when other economic indicators say that a recession is coming. Recession indicators have been triggered at other times recently, and the Fed has intervened on multiple occasions. But now that the global economy is the weakest since the last recession, have we finally reached a breaking point?
Many on Wall Street are taking matters seriously. We have not seen a yield curve inversion of this nature in 3,009 trading days—a long time. And the more inverted the curve becomes, the higher the odds of a recession.
Global central banks are already taking action, and there will be plenty of intervention as global economic conditions deteriorate. But there is only so much they can do, and at some point they will lose control.
Already, things are happening that are reminiscent of the last recession. We are on track for the worst year for store closings in US history, and another major retailer just announced that they will be closing all their stores (LifeWay Christian Retailers).
Communities all over the US, especially the economically depressed ones, are going to start looking bleak as the number of empty buildings continues to rise.
The flooding in the middle of the nation has destroyed thousands of farms, and so far it’s just a preview of what will happen throughout the spring. There will be another surge in farm bankruptcies, thousands of farmers won’t be able to plant crops this year, food prices will rise dramatically, and a lot of families won’t be able to stretch their food budgets far enough.
There are so many factors hammering the US right now. If the Fed is able to pull another rabbit out of the hat, it will be nothing short of a miracle.