Markets
Recession is near
Karl W. Smith | 07 Dec 2018 00:30

By one measure, the yield curve inverted on Monday Dec 3: The interest rate on five-year Treasury bond slipped bleow the rate on three-year bonds. 

That's a worrying  sign because rates on longer-term bonds are typically higher than those on shorter-term bonds, and such inversions are associated with recessions.

So far, however, I would consider the yield curve only "partially" inverted. 

A full inversion would be interest rates on two-year Treasury bonds rise higher than rates on 10-year bonds. 

In the last 40 years, each time this has happened, the US economy has entered a recession soon afterwards. 

This makes an inverted yield curve the most reliable indicator macroeconomists have for pre
dicting a recession. The last two times the yield curve inverted, in 1998 and 2008, the debate among economists was whether this time would be different. In both cases, it wasn't.



Download and read the latest issue of Focus Malaysia here:
Snippets
Shopee wraps up a record-breaking 2018

Shopee wraps up a record-breaking 2018 with over 12 million orders on 12.12 Birthday Sale


Impiana KLCC recognised for excellence at the HAPA

Impiana KLCC hotel recognised for excellence of its recreational spa and restaurant at the HAPA Malaysia Awards Series