Possible Recession and the Inverse Yield Curve

Discussion in 'Off-Topic Discussions' started by Tim D, Dec 28, 2005.

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  1. Tim D

    Tim D Member

    US slowdown fears as long-term yields fall

    http://news.ft.com/cms/s/74970858-7713-11da-a7d1-0000779e2340.html

    This is generally seen as a bad thing and was predicted to happen by some recently. Some seem to think that the Federal Reserve will continue to raise interest rates in the short term,that and the recent slow down in the housing market could make for a bad 2006. Not to mention the possible political ramifications in the midterm and possible 2008 election cycle.
     
  2. Orson

    Orson New Member

    Good question!

    Yup - this has been a concern ever since the re-ratcheting of interest rates up.

    Most economists think the US economy will continue to grow thru the year, but at a reduced clip compared with 2005. Growth matters because jobs and profits all come out of real growth. But the market's still been flat.

    I think the inversion is more a result of low world -wide interest rates (the Euro) and the great wash of dollars out there than any US economic problems.

    Where this soothsaying gets difficult is if we agree the Dow looks ahead six months. Does an yeild inversion tell us anything about how the future economy (next December-January 2007) will look in July? My guess is NOT. But then I'm not getting rewarded for my opinion.

    You, Tim?
     

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