Wall Street Red Flag: A Bond Market Indicator That Has Predicted Every Recession In The Last 50 Years Just Got Triggered
If the bond market is correct, the U.S. economy is definitely heading into a recession. Over the past 50 years, there have been six previous occasions when the yield on three-month Treasury bonds has risen above the yield on ten-year Treasury bonds, and in each of those instances a recession has followed. Now it has happened again, and this comes at a time when a whole host of other economic indicators are screaming that a recession is coming. Of course we have seen recession indicators triggered at other times in recent years, and the Federal Reserve was able to intervene and successfully extend this cycle on multiple occasions. But now that the global economy is clearly the weakest it has been since the last recession, have we finally reached a breaking point?
Many on Wall Street are taking what happened at the end of last week extremely seriously. According to CNBC, we have not seen a yield curve inversion of this nature in 3,009 trading days…
3,009 trading days is a very, very long time.
And now we will see how inverted the curve becomes, because as Zero Hedge has aptly pointed out, the more inverted the curve become the “higher the odds of a recession”…
To get an idea of what the models are currently showing, just check out this chart. At this moment, the odds of another recession are the highest they have been since the last one.
Many investors were hoping that the bond market would have better news for us on Monday, but instead things got even worse…
I know that just about everybody in America is writing about the Mueller Report right now, and I just posted an article about it too, but the outcome of that investigation is not going to change the trajectory of the global economy. It has been slowing down for quite some time, and that is the primary reason why we have seen an inversion of the yield curve…
Global central banks are already jumping into action, and I expect a tremendous amount of intervention as global economic conditions continue to deteriorate.
But there is only so much that they can do, and even though they have pulled a few rabbits out of the hat in recent years, at some point they are going to completely lose control.
Already, we are starting to see things happen that are very reminiscent of the last recession. For example, we are on pace for the worst year for store closings in all of U.S. history, and another major retailer just announced that they will be closing all their stores…
Communities all over America, especially the more economically-depressed ones, are going to start looking really bleak as the number of empty buildings continues to rise. This is something that I have warned about for a long time, and now it is happening on a massive scale.
As I end this article, I once again want to mention a factor that is going to have an enormous impact on our economy throughout the rest of this year. The flooding in the middle portion of the nation has destroyed thousands of farms, and the National Weather Service is warning that the flooding that we have seen so far is just “a preview of what we expect throughout the rest of the spring”. This is already the worst flooding disaster for U.S. farmers in modern American history, and it is going to get much, much worse.
We are going to see another huge surge in farm bankruptcies, thousands of farmers will not be able to plant crops at all this year, food prices are going to rise dramatically, and a lot of families all over America are going to have a real problem making their food budgets stretch far enough.
There are so many factors hammering our economy right now. If the Federal Reserve is able to pull another rabbit out of the hat this time, it will be nothing short of a major miracle.
We are literally at a critical tipping point, and it is not going to be easy to pull us back from the brink this time.
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