Friday, August 16, 2019

The yield curve inverted and some investors are scared. I never thought I'd ignore an inverted curve, but think about this. Interest rates increase before inverting and signaling a recession. Interest rates are at historic LOWS and do not curtail borrowing.

Look at these graphs from StockCharts.com. The curve inverted at a much higher rate before the stock market decline in 2000.
And again before the recession of 2007:

Neither the consumer nor corporations have trouble borrowing at these low rates.

The consumer will continue to drive this economy and stock market to new highs. 

6 comments:

Anonymous said...

Your market commentary (especially regarding the yield curve) should always be taken into account Mrs Weir.

My guess is that since the shape of the yield curve is not in-and-of itself an instantaneous "signal" to enter or leave the stock market but an indication of favorable/unfavorable conditions for the economy, we currently have nothing more than the presence of somewhat unfavorable conditions. From a technical standpoint this means that long term technical bearish signals are to be taken seriously. For the time being such signals are not present nevertheless.

Giorgos Siligardos

Deborah said...

Thank you for your comment, Mr. Siligardos. Your thoughts are interesting.

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