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Dow slumps triple digits as Treasury yield curve inverts (recession indicator)
MarketWatch.com (by Dow Jones) ^
| 12/27/05
| Tomi Kilgore
Posted on 12/27/2005 1:36:38 PM PST by SierraWasp
Dow slumps triple digits as Treasury yield curve inverts ($INDU, $COMPQ, $SPX, $TNX) by Tomi Kilgore
NEW YORK (MarketWatch) -- U.S. stocks closed sharply and broadly lower, with the Dow industrials suffering its first triple-digit loss in 2 months, as the Treasury yield curve inverted for the first time in five years, sparking fears of a possible recession. The Dow ($INDU) slumped 105 points to an unofficial close of 10,778, its lowest close in 2 weeks and the biggest one-day point loss since Oct. 27. The Nasdaq Composite ($COMPQ) shed 22 points to 2,227 and the S&P 500 ($SPX) slid 12 points to 1,257. The 2-year Treasury note yielded 4.347% while the 10-year Treasury yield ($TNX) fell 0.039 percentage points to yield 4.341%; the only time in the last 30 years that an inverted yield curve wasn't followed by a recession was in 1998, when the curve inverted briefly during the Asian financial crisis. Recession worries overshadowed a sharp drop in natural gas prices amid reports of warmer-than-usual weather, with the front-month futures contract tumbling 10% to a 4-month low of $11.022 per million British thermal units on the New York Mercantile Exchange.
(Excerpt) Read more at bigcharts.marketwatch.com ...
TOPICS: Business/Economy; Front Page News; News/Current Events
KEYWORDS: bonds; chickenlittle; currencycollapse; depression1990; djia; indicator; interestrates; recession; yieldcurve
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To: tubebender; Dog Gone
Oh my... Those FRustrated FReepers!!! Ha Ha Ha!!!
Here tis, Dog Gone! I fergot ta Ping ya!!!
41
posted on
12/27/2005 2:48:10 PM PST
by
SierraWasp
(EnvironMentalism... America's establishment of it's new unconstitutional State Religion!!!)
To: SierraWasp
the only time in the last 30 years that an inverted yield curve wasn't followed by a recession was in 1998, when the curve inverted briefly during the Asian financial crisis. That is objectively false. There was no recession in 1988.
To: SierraWasp
..the only time in the last 30 years that an inverted yield curve wasn't followed by a recession was in 1998, when the curve inverted briefly during the Asian financial crisis. In the last 30 years, the yield curve has had to invert by two percentage points or more for a recession to occur. I haven't seen anyone predicting that kind of inversion as yet.
43
posted on
12/27/2005 2:55:56 PM PST
by
Mase
To: SolidSupplySide
"There was no recession in 1988."The article didn't say "1988!" It said 1998!!!
44
posted on
12/27/2005 2:57:58 PM PST
by
SierraWasp
(EnvironMentalism... America's establishment of it's new unconstitutional State Religion!!!)
To: Grendel9
To: dubyaismypresident
"If they hadn't overreached in their raising of short term rates, there wouldn't be a yield curve inversion."
I hate it when the yield curve inverts.
46
posted on
12/27/2005 2:58:21 PM PST
by
EQAndyBuzz
(Liberal Talking Point - Bush = Hitler ... Republican Talking Point - Let the Liberals Talk)
To: SierraWasp
The article didn't say "1988!" It said 1998!!! I assert that there was an inverted yield curve in December 1988, and no recession. The article says that 1998 was the only time that there was inversion with no recession. I say that isn't true.
To: Mase
In the last 30 years, the yield curve has had to invert by two percentage points or more for a recession to occur. The last time we had inversion by two percentage points or more was 1980.
To: mhx
They are about done raising rates. The power range is 2-5%, which is where they are. If the economy turns south, there is room to lower rates for a couple years. But, it is time for mortgage lenders to start making some money.
49
posted on
12/27/2005 3:01:32 PM PST
by
RightWhale
(pas de lieu, Rhone que nous)
To: EQAndyBuzz
I hate it when the yield curve inverts.You were in a 4G, inverted dive with a Mig-28?
Yes ma'am.
*cough* bullsh*t! *cough*
50
posted on
12/27/2005 3:06:14 PM PST
by
xrp
(My current list of worshippers: MNJohnnie)
To: Mase
That sounds good. I have a hard time puttin my faith in some of these "technical indicators" since the market is so heavily weighted with emotionalism and so many new and uninitiated investors these days!!!
Some of these are just turning into old liberal Democrat wives tales, I think.
51
posted on
12/27/2005 3:06:37 PM PST
by
SierraWasp
(EnvironMentalism... America's establishment of it's new unconstitutional State Religion!!!)
To: xcamel; Carling; dubyaismypresident; SierraWasp; q_an_a; theDentist
Not a single Bear on the board...
And most if not all of you 'blamed' the selling on 'tax loss', 'profit taking', 'bond markets'....etc etc etc...Anything but the stocks themselves...
All Bulls and one Bear (Me)....
I feel even better about my Cash, and Net Short Position...he eh...
When you guys are saying 'this market sucks', 'I think I will short some stock', 'I am going to get some more Puts'...I know it will be time to reverse...
52
posted on
12/27/2005 3:06:41 PM PST
by
antaresequity
((PUSH 1 FOR ENGLISH, PUSH 2 TO BE DEPORTED))
To: Attention Surplus Disorder
I think the $3K limit on capital losses/yr doesn't apply.
That's the one I forgot about. I've had 400 ins and outs this year and I have to find a CPA or tax consultant who knows daytraders, swing traders, so I can get this mark to market for next year. The guy I had do them last year didn't even mention them. Later I heard about it in an investor's chat room. Thanks for the info. I'll go read the IRS bulletin so I can get really informed! sarc extremely on.
53
posted on
12/27/2005 3:07:18 PM PST
by
jwh_Denver
(New Year's Resolution #1. Try to cut to half those looks my wife gives me. .....punt.)
To: SierraWasp
ARRRRRRRRRRRRRRRRRRRRGHHHHHHH!!!!!!!!!!
54
posted on
12/27/2005 3:08:02 PM PST
by
Cyber Liberty
(© 2005, Ravin' Lunatic since 4/98)
To: SolidSupplySide
Oh! I see!! I apologize for misunderstanding what I thought was your typo!!!
55
posted on
12/27/2005 3:08:17 PM PST
by
SierraWasp
(EnvironMentalism... America's establishment of it's new unconstitutional State Religion!!!)
To: SierraWasp
View the chart posted on my # 106 and read my # 99 on this thread. The treasury yield curve is not inverted. The curve is flat for the first time in five years. But it may be inverted early next month. An inverted yield curve is only one sign of recession. The are some others that the MSM have not focused on yet. Watch the news very closely. Over 800,000 real estate related jobs are at risk; if they are lost when the real estate bubble collapses, watch out. The bubble just popped in Boston.
http://www.freerepublic.com/focus/f-news/1547701/posts?page=106#106
56
posted on
12/27/2005 3:12:26 PM PST
by
ex-Texan
(Mathew 7:1 through 6)
To: SierraWasp
Where are those guys who were predicting 11000 a few weeks ago - Their wind done gone.
57
posted on
12/27/2005 3:13:03 PM PST
by
ex-snook
(God of the Universe, God of Creation, God of Love, thank you for life.)
To: SolidSupplySide
The last time we had inversion by two percentage points or more was 1980. I pulled that number from an article from the WSJ today. Do you know what the amount of inversion was during 1991-92?
58
posted on
12/27/2005 3:14:52 PM PST
by
Mase
To: SierraWasp
High demand for longer term bonds (particularly by foreigners) reduces yields.
Government using more short term borrowing.
Very strong economy, low inflation.
Inversion not a big deal.
To: SolidSupplySide
It has to be inverted for more than a few days and by more than just a few hundredths of a point. I believe 7 out of the last 8 recessions have been preceded by an inverted yield curve. It's a great indicator because it shows how out of control and determined the Federal Reserve is to cause a recession.
60
posted on
12/27/2005 3:16:51 PM PST
by
Moonman62
(Federal creed: If it moves tax it. If it keeps moving regulate it. If it stops moving subsidize it)
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