Welcome Back!
Bond yields continue to crash in response to seriously misguided US foreign policy.
Thursday evening, the 5-Year treasury yield slipped below 2% for the first time since November of 2017.
What Happened?
The short answer is Trump levied Tariffs on Mexico, demanding the country put an end to illegal immigration flowing into the US. Economic risks rose, thus bond yields fell.
Realistically, a recession was baked in the cake anyway. Trump merely sped up the process.
For discussion of Trump’s action please see “Hello Recession“.
Mike “Mish” Shedlock
I called for two recessions that never happened
One of them may have but the NBER did not see it that way.
One I foolishly followed ECRI based on what now appears to be coincident nonsense.
Discussing recessions and calling them are not the same thing, but yes I called for two that did not happen. I even pointed out my errors previously.
This is a third call.
The economy muddled through better than I thought.
And finally, I will not be bragging when this one happens.
Publicly and voluntarily owning one’s own errors ought not to be a rare virtue – and yet it seems to be these days. Kudos to you, Mish! You have been working overtime for your readers the last couple of days – I hope you can have a restful and rejuvenating weekend. Cheers!
The 6 month is higher than the 10 year. So short term savings rates are > long term loan rates. Seems like bank earnings, outside of credit cards, may be challenging.
And how.
Mish. Can you list the last 5 years of your recession predictions? I think you have multiple recession predictions in each year.
As we will surely have a recession at some point, recession predictions seem like an easy way to later claim “to have seen it coming”.
Mish’s predictions are a bit deeper than just that there will be a recession. He has forecast what effect it will have on asset values and ROIs over time. When a recession commences is almost irrelevant to the value of his analysis. Granted that in the long run we will all be dead, the Austrian orientation of Mish, applied selectively to events and data, can be right (I believe it basically is) and actionable despite uncertainty of timing of recessions.
Once could make an argument that we’ve been in one long recession since the Lehman collapse.
We have been in a recession for at least ten years. QE, debt out the wazoo, and fake inflation calculation made sure the economy didn’t crater. Bring interest rates above neutral, and you will see.
We are headed to zero again. Maybe sooner than we know.
Yep, the spread between the one year and two year implies 3-4 rate cuts in the next year. Otherwise, buying the two year here makes no sense.
We can safely say the flight of capital is out of Mexico and into USA. The same goes for manufacturing. Surprise! Mexicans are paying for the wall. I like what happens when Mexicans, Chinese, Germans, and North Koreans don’t play ball with Trump. They go from peaches and cream to third world Chicago in one fell swoop.
And US consumers pay for it. Why do you think rates are dropping? The investment community disagrees with you. Falling world trade does not improve our economy.
I imagine while Nero was setting fire to Rome he had his sycophants cheering him on.
Nero didn’t set fire to Rome. A while back Martin Armstrong had an interesting story about the actual details.
Looks to me like US investors and consumers are paying real money for a make believe wall.