Posted on 12/20/2022 5:39:27 AM PST by Kaiser8408a
Lightning strikes!
The 12-month-ahead probability of recession spiked in November across all of yield curve models. The deterioration in the outlook was most significant in the one that relies on the 3-month/18-month forward spread — Fed Chair Jerome Powell’s favored model — which now sees a 59% chance of recession next year, compared with almost 0% six months ago. Yield curve models see the strongest signal for recession starting around September 2023.
We assess the probability of recession in the months ahead by looking at a suite of models: three yield curve models — which take as their sole input the spreads between 2-year/10-year, 3-month/10-year, and 3-month/18-month forward US Treasury yields, respectively — as well as a model that takes 13 financial and macroeconomic indicators as inputs.
All three yield curves inverted further in November, indicating higher probability of a downturn next year. Notably, the 3-month/18-month forward curve inverted for the first time this year, and the model based on that indicator suggests a 59% chance of recession in 12 months (vs. 32% for the same reference period in the prior update) — that would be in November 2023.
My favorite yield curve is the 10-year – 2-year curve which has been inverted for 112 straight days.
Winter is coming ,,, in September.
(Excerpt) Read more at confoundedinterest.net ...
As long as they keep spending more than comes in the fed is fighting a losing battle
What a dung heap.
Haven’t we already had two consecutive quarters of negative GDP?
Like Jo Jo Biden say, “Better, snivit, dribble, Back, wampy divit, pow, Build, butter. How do I get outta here”?
Fed Chair Jerome Powell’s favored model — which now sees a 59% chance of recession next year, compared with almost 0% six months ago. Yield curve models see the strongest signal for recession starting around September 2023.
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This is the same Fed that relied on Q2 employment gains being 1.1M new jobs when the reality was a net gain in Q2 of just 10,000. The numbers were probably gamed for the midterm elections. The Fed’s instrumentation is corrupt along with everything else.
I dont doubt a recession is here or coming but using inverted yield curves is basically just taking a poll from investors. Investors as a whole are just as clueless about the future as anyone else.
How can you tell?
How can you tell when we have a Recession if the definition can be overridden by those in Power? If a Recession is no longer 2 down quarters, what is it?
It is whatever the White House says it is.
Time for Fed stop tightening. I don’t know why the Fed refuses to listen to this market signal. Except when propped up by “Quantitative Easing,” 10-year rates are the market’s inflation expectation. There’s no mystery why businesses can’t get the short-term loans they need to survive when long-term borrowing rates are cheaper than short-term rates. And while prices are still up, inflation is actually down. Although the year-over-year rate is still high, the past five months’s core inflation rates have totaled only about 1%, pointing towards an annual rate of under 2.5%
The first 2 quarters were negative. That is the definition of a recession, 2 quarters in a row. Q3 was negative, but the media keeps saying that we might be in a recession in 2023. I would bet that Q4 will be negative as well. At what point do we enter into a depression?
Hopefully, as reported by the msm, January of 2025.
Because that means a Republican will have been elected president.
Biden’s accomplishments of dismantling America is working to destroy it’s foundation and allow every uncivilized thing to gain power.
Xi Putin and Kim much happy
Not directed at Kaiser, but in general, if you don’t think there is already a recession then you aren’t really paying attention.
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