US interest rates: risk of recession not yet averted

The risk of recession is not yet averted

The yield curve remains inverted in the US. A similar constellation last prevailed before the financial crisis.

Posted at 10:25 am today

Source: Bespoke Investments

Generally, long-term bonds yield better yields than short-term bonds because investors want to compensate for holding them longer. If interest rates at the short end are higher than the long end, this is referred to as an inverted yield curve.

In the past, an inversion of the yield curve – at least in the US – was a signal that most reliably heralded an imminent recession or weakening economy.

As measured by the yield difference between the 10-year and 3-month US Treasuries, the yield curve in the US has now inverted for more than 150 trading days in a row. As the bespoke investment chart above illustrates, such long-term levels have only been reached a handful of times in the last few decades – say during the global financial crisis in 2006-2007. The danger of the US economy heading into recession does not appear to have been averted.

Frank Hager He has been writing for “Finanz und Wirtschaft” since 2008 – initially focusing on technology stocks, then on global stock markets in the markets department. He is the Associate Head of Department since 2019. The economics graduate previously worked as an energy analyst.More info

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