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Strategies & Market Trends : ajtj's Post-Lobotomy Market Charts and Thoughts
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ajtj99
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To: Jacob Snyder who wrote (53785)3/19/2022 2:50:02 PM
From: Jacob Snyder2 Recommendations  Read Replies (1) of 97315
 
Trouble with the curve: The Treasury market doesn't look too convinced that a soft landing is on the cards.

There is "a remarkably flat curve for the very beginning of the rate hiking cycle," ING economists said. "The 2yr went into the meeting at quite an aggressive discount versus the funds rate anyway, one reminiscent of rate hike cycles that were typical before the great financial crisis, when 50bp hikes were not unusual," ING added….

On average, "it takes around three years from the first Fed hike to recession," Deutsche Bank's Jim Reid said. "However the bad news is that all but one of the recessions inside 37 months (essentially three years) occurred when the 2s10s curve inverted before the hiking cycle ended."

"With all the recessions that started later than that, none of them had an inverted curve when the hiking cycle ended," he added. "In fact, hiking cycles that ended with the curve still in positive territory saw the next recession hit 53 months on average after the first rate hike, whereas the next recession for hiking cycles that ended with an inverted curve started on average in 23 months, so just under two years."

"As a reminder, none of the US recessions in the last 70 years have occurred to until the 2s10s has inverted. On average it takes 12-18 months from inversion to recession…. seekingalpha.com
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