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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: Wyätt Gwyön who wrote (13016)	5/3/2004 12:18:26 AM
From: mishedlo	Read Replies (2) of 110194

Would we be seeing a "false" positive curve because of the Fed holding rates down and thus assume we are not in danger of a recession within the next 12 months? I could make good cases for both sides of that argument, but the answer is that we would be in completely new territory with little historical precedent. I read that paragraph 5 times and I still do not understand it. Explain this to me: Remember, ten-year rates are 4.5%. Could the "natural" yield curve sometime later this year be negative, suggesting a recession 12 months later? WTF is he saying? Never mind. I get it finally. If natural rates are 3.5%, at 4.5% we are signaling recession. But by that measure, how long have we been negative by "natural rate" theory? M

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