Global RECESSION delayed? The warning signals from the bond market
In the latest episode of Alfonso Peccatiello’s series on the economy, he delved into the warning signals coming from the bond market that could potentially delay a global recession. With the recent volatility in financial markets and concerns about an economic slowdown, investors are looking for clues in the bond market to gauge the health of the global economy.
Peccatiello, a renowned economist and financial analyst, highlighted the significance of the bond market as an indicator of economic health. Bonds are debt securities issued by governments or corporations to raise capital, and their yields are closely watched by investors as they provide insights into the future direction of interest rates and economic growth.
One of the key warning signals that Peccatiello discussed is the inverted yield curve, which occurs when short-term bond yields are higher than long-term bond yields. This phenomenon has historically been a reliable predictor of recessions, as it suggests that investors are more worried about the near-term outlook for the economy than the long-term.
Another important indicator that Peccatiello mentioned is the widening spread between investment-grade and high-yield bonds. When this spread widens, it typically signifies increased risk aversion among investors and a higher likelihood of default on high-yield bonds. This could be a sign of financial stress in the economy, which could eventually lead to a recession.
Despite these warning signals, Peccatiello pointed out that there are also factors that could potentially delay a global recession. Central banks around the world have been implementing monetary stimulus measures, such as interest rate cuts and quantitative easing, to support economic growth. Additionally, fiscal stimulus packages from governments could provide a much-needed boost to the economy and help stave off a recession.
In conclusion, while the warning signals from the bond market are cause for concern, there are also factors at play that could potentially delay a global recession. It is important for investors to stay vigilant and closely monitor developments in the bond market, as they could provide valuable insights into the future direction of the economy. As always, it is crucial to diversify your investment portfolio and seek the advice of financial experts to navigate these uncertain times.
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IN 2009 the housing sector became undervalued and unable support the mortgages. Mark to the market values then crashed causing financial crisis. Now how are all the half empty office buildings going to survive refinance?
Global recession already occurred
I think you severely underestimates the Fed's ability to bail out anyone holding collateralized debt.
The bear steepening is coming again, because the Fed's credibility is fading.
The money stock of M2 is still far too excessive, and banks are lending recklessly, pretending and extending bad loans, thereby increasing the risk of a deeper recession. The US commercial real estate contains a trillion dollars of bad debt maturing in 2024, because the banks extended the bad loans in 2023. The banks can only extend bad loans for so long as their cash reserve buffers are not limitless.
Central Banks finance the fiscal debts and the commercial banks so yes the central banks are also responsible for inflation
Thanks Alf you are truly one of the most intelligent macro on youtube. unfortunately for me by listening to you and like you I have not made much money since Nov. but I believe your time will come very soon
Macro fundamentals don't matter until they do. And then it gets ugly very quickly! Yes, global recession has been delayed so long that it now seems impossible. But that's exactly what everyone thought before every reversion in the last hundred years. This never changes.
lol this guy still here? he got his head handed to him in 2022