Release date- 29082019 - After finding support from escalating trade tensions between the US and China, gold prices kept its upside movement on Wednesday as recession worries increased due to deepening inversion between short and long term US yield curves
and then fell slightly due to stronger dollar and profit taking however these movements are seen as consolidation at these levels.
oth the US and UK yield curves
are on the verge of inverting.
"The yield curves
are all crying timber that a recession is almost a reality, and investors are tripping over themselves to get out of the way."
have now inverted in the US, in Australia, Canada, and a number of other advanced economies.
With pain fresh from the market downturn in the fourth quarter of 2018, it is understandable to be concerned and worried about what future markets may hold with what I have stated about inverted yield curves
implying an impending recession.
The Bank of England's Jan Vlieghe has presented the argument that the unwinding of quantitative easing need not impact yield curves
contain a collection of data points, each of which is an interest rate for a given Treasury maturity and any of which can vary over time.
The San Francisco Fed's research department argues that every recession in the past sixty years has been preceded by an inverted yield curve
. Inverted yield curves
have telegraphed all nine recessions since 1955 with only one false positive, in the mid-1960s.
To understand why, we need to understand inverted yield curves
, hear the nuances in what was possibly Janet Yellen's final testimony before Congress last week, and remember that the Fed doesn't have to raise rates to tighten monetary conditions.
Some economists, he points out, try to "prove" recessions result from negative yield curves
. They point to the recessions of 1991, 2000, and 2007-2009 as coinciding with flat yield curves
between three-month Treasury Bills and 10-year Treasuries.
The bottom line is that yield curves
contain important information for business cycle analysis, but like other indicators, should be interpreted with caution.
Our lead article shows how yield curves
can help economists understand such events as the global financial crisis.