The yield curve is inverted in 11 different spots. The latest is 5-year to 3-month inversion.
The yield curve recession signal is louder and louder. Inversions are persistent and growing.
Let’s compare the spreads today to that of December 18, the start of the December 2018 FOMC meeting.
Yield Curve 2019-02-26 vs December and October 2018
Yield Curve Spread Analysis
- Yellow: Spreads Collapsed Since October (1 Month to 5 Years)
- Pink: Spreads Remained Roughly the Same (7 Year)
- Blue: Spreads Increased (30-Year and 10-Year)
Something is happening. What is it?
- The bond market is staring to worry about trillion dollar deficits as far as the eye can see
- The bond market has stagflation worries
- The bond bull market is over or approaching
My take is number one and possibly all three.
An in regards to recession the economy is weakening fast.
- Housing Starts: Yet Another Unexpected Thud, Down 11.2 Percent
- Home Resales: Existing Home Sales Down Again: -1.2% Month Over Month, -8.5% Year-Over-Year
- Industrial Production: Industrial Production Dives, Wiping Out a Strong December and Then Some
- Retail Sales: Shockingly Weak Retail Sales: Down 1.2% in December, Sharpest Decline Since 2009
US core factory orders (ex transports) fell for the second month in a row in December. This is the worst sequential drop since Feb 2016.
New orders ex-trans fell 0.6% in Dec. after falling 1.3% the prior month.
The headline factory orders rose 0.1% MoM (well below the 0.6% MoM gain expected).
Capital goods non-defense ex aircraft new orders for Dec. fall 1% after falling 1.1% in Nov.
Non-durables shipments for Dec. fall 1% after falling 2% in Nov.
Not a pretty picture, but it was an 8.0% drop in Defense spending that triggered the weakness – so we’re gonna need moar war.