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Response to Tiggeroshii (Reply #2)

Wed Aug 14, 2019, 03:08 PM

3. different part of the yield curve

various parts of the yield curve have been inverted for a while. back in march, the inversion of the 10-year vs. the 3-month made headlines. that's a pretty good recession predictor, but the 2-year is historically a stronger predictor of recession.

part of the reason is that the 3-month is more in control of the fed and/or expectations of fed action. that's good and bad. as far as the signal goes, it means that the 3-month might temporarily be at the "wrong" level, predicting recession when the risk is actually low.

the 2-year is harder for the fed to control, for better or for worse, which means that a 10yr-2yr inversion is more likely to be indicative or real underlying problems rather than a temporary fed miscalculation.

i think yellen's point is that a lot of our problems could go away if donnie would just stop his tariff nonsense.

wouldn't surprise me if that's his game anyway. depress the economy until summer before the election, then drop the tariff crap while declaring victory, watch the markets boom, and ride the wave to re-election.

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