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Economist Intelligence: EIU
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Inverted fears
Does an inverted yield curve mean a recession? I think in today's context, it is not such a clear signal. Let’s start by explaining an inverted yield curve: interest rates to borrow over a short period (like a year) are higher than for a long period (like ten years). This is often claimed to be a predictor of a recession, but the causation is really in the other direction: if there is a recession, interest rates will almost certainly fall and, if you expect that, then the yield curve would be inverted. However, there are other scenarios where the yield curve might be inverted even if a recession is not on the cards.
Today, there’s a very clear alternate reason why we might have inverted rates and no recession. This is simply because we are at the top of an interest-rate cycle, and not necessarily because a recession is coming. Inflation accelerated significantly as a result of covid stimulus and pent-up demand after lockdowns ended, with price rises from supply-chain bottlenecks compounded by war-derived commodity price surges. With this high inflation, interest rates had to rise by a lot. That is ending (slowly!), and rates will fall in the future. Hence, an inverted yield curve.
High rates are crimping investment, but not enough to cause a recession (as defined by the US National Bureau of Economic Research). If you believe that we are at the peak of a rate cycle, then an inverted yield curve can be easily explained; this time, the reason to be at the peak is plausibly not because we are about to enter a recession.
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1yThanks for the updates on, The Economists Intelligence:EIU.
There is no historical data to reference for interest rates where governments attempt to destroy their own economies for reasons known only to their bureaucracies. Reference points are useless under the NWO pushed by the WEF.