Yield curve inverted

the curve has been inverted for a bit, but the doom cross is the 10yr 1yr, as I understand it.

What are the actual finance guys on this board inferring from these changes?

We have been in a slow expansion for years now, the longest expansion in generations iirc.

 

Subbed. FWIW, I've started making my position a 50/50 position (bond 50 is partially metals).

 

I think it signals a bull market from the time it inverts, followed by a recession.

There are some rules on how long it has to stay inverted to signal a recession, it’s not just one day (I heard that on CNBC but haven’t been able to verify with a source).

But check out the historical returns from the time of inversion to the time of the recession. It’s pretty significant, not time to try to time the market just yet.

Edit: I decided to do some reading. Average lag time between the first inversion and the onset of a recession is 14 months. Average lag time between inversion and market top is 8 months. If you’re a market timer, that says everything you would want to know.

I will be holding and buying through whatever happens, just find it interesting to discuss.

 

I think the important thing to remember is that nobody can predict what the market is going to do. I like to read old articles on Google from the so-called experts to remind me of this. Look at what’s being said before any big market downturn or upturn and you’ll see, they never see it coming. It’s actually hilarious.

The best thing to do is make a plan and stick to it. Whether it’s hold on and ride it out, or get out of the market. As long as you don’t panic sell, you’ll be fine. Also, recessions are a normal part of the market cycle, and present discounted buying opportunities.

The studies I have read all support “time in the market beats timing the market,” so holding tight has always been statistically more successful than trying to time the ups and downs. You may get lucky at times, but in the long-term, it isn’t going to work.

 

The rule on the inversion of the yield curve says it has to be inverted for a quarter for the rule to hold; so stay tuned.

 

Thanks, I was wondering about this. Do you know any more than that? Does it have to be inverted everyday for the quarter, or just a certain amount of time? I know it's a reliable predictor so it is something I pay attention to, just don't know what exactly I'm looking for.

 

Going back to what I quoted when I asked the question to rnish though, it has to stay inverted for a certain amount of time to be a reliable predictor. That is what it has done in the "recession predictions" that have turned out to actually happen. I don't think we're there yet, a quick inversion has never predicted anything. I was asking rnish for more info on the actual indicator.

In other words, the curve has not inverted for the purpose of predicting anything, yet.

 

what the heck is this curve supposed to do for a pending disinflationary period that the FED is going to need to fight it seems as i was thinking they were to prevent potential panic
what a mess to avert!

i already read one TW poster wanting to 'wait and see' what the '21 Supra prices are going to be before making a decision to buy
deflationary trap...
crazy times

 

It will be impossible to avert once the Fed runs out of ammo. Unless they want to go negative like other countries have. Then the question becomes, how do you climb out of that hole without causing more disaster? They'd have to hike rates so much more in that case.

 

The Fed will not run out of ammo. Desperation is the mother of invention. The Fed has started to buy bonds and “high yield“ ETFs. High yield is a euphemism for junk. For example Royal Caribbean is currently selling 3 billion in bonds using their ships as collateral. The ships are being valued as they were in January 2020, when they were operational luxury playgrounds. Today they are worth about $20 a ton (as scrap steel). The Fed is effectively underwriting the higher price. Ignoring todays real market price. The hype/hope is next January the economy opens up and the ships will again be luxury playgrounds. Enjoy the ride.

 

if this crap persists for too much longer i can see a new government institution being started

Department of Psychology

my brother lives for the bowling alley, he is good at it, since the bowling alleys have been shut down for months he is not in a happy place, glad he is not suicidal that i know of