This yield curve expert with a perfect track record sees the risk of recession growing:
As the Dow Jones Industrial Average DJIA, +0.82% , S&P 500 SPX, +0.82% , and Nasdaq Composite COMP, +0.64% lost anywhere from 6.6% to 7.9% in the worst May for stocks since 2010, bond prices have soared.
Campbell Harvey, a professor at the Fuqua School of Business at Duke University, has tracked yield curve inversions for more than 30 years. He showed the reliability of the indicator in his doctoral dissertation at the University of Chicago in 1986. Harvey’s chart shows the yield curve projections of a recession’s probability hit 80%-100% in the 1970s and 1980s, then settled into the 40%-50% range for the last three recessions. As of June 3rd, the yield curve implied about a 40% probability of a recession — definitely within the danger zone.
That concern is underscored by the latest Duke University/CFO Global Business Outlook, which found that 67% of the chief financial officers surveyed believe the U.S. will be in a recession by the fourth quarter of 2020, while 84% believe a recession will be underway by the first quarter of 2021. That’s pretty much in line with a negative yield curve’s 12- to 18-month lead time in predicting recession, Harvey said.
Greater caution, he added, “actually increases the chance that, if there is a downturn, it's a lot softer. I much prefer the mild [recession]. I want to engineer the soft landing. One way to do that is for consumers and corporations to be prudent when they're faced with these red flags.”
México Últimas Noticias, México Titulares
Similar News:También puedes leer noticias similares a ésta que hemos recopilado de otras fuentes de noticias.
Ron Howard frames Pavarotti story through arias for new documentaryDirector Ron Howard did not know much about opera, but he understands drama when...
Leer más »
Yield curve regaining some of its forecasting prowess - BoE researchChanges in the yield curve - a measure of the gap between long- and short-term b...
Leer más »
Global recession fears grow as factory activity shrinksFactory activity contracted across Asia and Europe last month as an escalating t...
Leer más »
General's growing political clout poses a risk to Sudan's transitionSix weeks after a coup d'etat in Sudan, high-profile military leader Genera...
Leer más »
Pledging 'appropriate' action on trade risk, Fed's Powell seen opening door to rate cutU.S. Federal Reserve Chairman Jerome Powell said on Tuesday the central bank wil...
Leer más »
The vice chair of the Fed says if the yield curve inverts, he would take it 'seriously'Federal Reserve Vice Chairman Richard Clarida said Tuesday he would take the inverted yield curve 'seriously' if it 'persists for some time.'
Leer más »
Why Chick-fil-A's decision to close on Sundays is a brilliant business strategyChick-fil-A locations are all closed on Sunday, in keeping with founder Truett Cathy's Christian faith. Here's why it's a brilliant business strategy.
Leer más »
JP Morgan sees the 10-year yield falling to 1.75% as trade tensions push the Fed to cutJ.P. Morgan Chase strategists cut their forecast for the bench mark 10-year Treasury yield to 1.75% at year-end, from a prior forecast of 2.45%.
Leer más »
Get set for U.S. bond yields to skid much lower, warns J.P. MorganOur call of the day comes from J.P. Morgan, which has lowered the bar on how low the yield on the 10-year Treasury note could go. That’s as investors move...
Leer más »
Phantom Yields Boost JPMorgan EMBI IndexesJPMorgan Chase’s widely tracked emerging-market bond indexes have overstated yields for the past 18 months, boosting their allure to investors hungry for alternatives to low-yielding developed-country debt.
Leer más »
JPMorgan's deposit growth slowing as customers seek higher yieldDeposit growth at JPMorgan Chase & Co, the largest U.S. bank by assets, is slowi...
Leer más »