Komal Sri Kumar, Sri-Kumar Global Strategies president, and Barry Knapp, Ironsides Macroeconomics director of research, join ‘Squawk Box’ to preview Fed’s rate hike decision, the impact on the markets, what to look forward to for the rest of the year, and more. For access to live and exclusive video from CNBC subscribe to CNBC PRO:
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BREAKING: Recession News
LEARN MORE ABOUT: Bank Failures
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Renowned economist Komal Sri-Kumar has recently made a bold prediction about the state of the economy, claiming that the 10-year Treasury yield indicates an impending recession. Sri-Kumar’s analysis suggests that investors should brace themselves for an economic downturn in the near future.
The 10-year Treasury yield is the interest rate that investors receive for holding U.S. government debt for a ten-year period. This yield is often considered a crucial benchmark for the economy, as it reflects the market’s expectation of future economic growth and inflation. When the yield drops, it indicates a lack of confidence in the economy, often leading to a recession.
Sri-Kumar argues that the recent decline in the 10-year Treasury yield is a warning sign that cannot be ignored. The yield has dropped significantly in recent months, reaching its lowest level since 2017. This decline can be attributed to various factors like trade tensions between the United States and China, geopolitical uncertainties, and global economic slowdown fears.
Historically, a decline in the 10-year Treasury yield has typically preceded economic recessions. It serves as a reliable indicator for economists and investors to assess the health of the economy. As the yield approaches zero or drops into negative territory, it implies that investors are seeking safe assets, fearing an imminent economic downturn. This flight to safety often prompts a decrease in consumer spending, which in turn negatively impacts economic growth.
Sri-Kumar’s warning resonates with other economic indicators that have been signaling a potential downturn. The inverted yield curve, where shorter-term bonds yield higher interest rates than longer-term bonds, has occurred multiple times throughout history and is widely considered a reliable predictor of recessions. Additionally, global manufacturing activity has been slowing down, and central banks around the world are cutting interest rates to stimulate growth, further suggesting a weakening economy.
To paint a clearer picture of the impending recession, it is essential to examine the potential consequences it could bring. A recession typically leads to job losses, reduced consumer spending, and declining business investments. It can also create financial turmoil in stock markets and lead to a decrease in housing prices. These consequences have a ripple effect across various sectors, causing economic uncertainty and negatively impacting individuals and businesses alike.
However, it is important to note that not all economists share Sri-Kumar’s view. Some argue that the yield curve may be distorted due to unconventional monetary policies and that global factors like the U.S.-China trade war are temporary and can be resolved with trade agreements.
Regardless of differing opinions, it is prudent for investors and policymakers to closely monitor economic indicators and be prepared for any potential downturn. While it is impossible to predict the exact timing and severity of a recession, the 10-year Treasury yield and other indicators highlight the importance of being prepared and taking proactive measures.
In conclusion, Komal Sri-Kumar’s analysis of the 10-year Treasury yield serves as a warning that a recession may be on the horizon. The declining yield, coupled with other economic indicators, suggests that economic growth may slow down in the near future. It is crucial for individuals, businesses, and policymakers to heed these warnings and be prepared for any potential challenges that may arise.
Very well articulated; I wish I had more time for trial and error, but I'll be 56 in October and I need ideas and advice on what investments to make to set myself up for retirement, especially with the looming inflation and recession; my goal is to have a portfolio of at least $500k at the age of 60.
I trust this Indian man over our overhyped greed driven analysts or BlackRock
In bay area (San Jose ) real inflation still over 10% not so called fudged n fake 3%. Gas n diesel prices r over $5 in bay area and grocery , rents n basis day to day necessities prices r still skyrocketing what the hell Powell is saying. Those CPI (3%) numbers r fudged
Kumar said the 10 year is a very good value for the investor at 3.8% because it’s going to 3%??
THE. MEME. STOCK. IS. WEWORK. RISE APES RISE
We are already in a recession. What is coming is far worse and has been planned as part of the great reset. “You’ll own nothing and be happy” (WEF)
IT industries are worst people depending on them for living will suffer hugely useless industry…
With inflation running at a four-decade high, the Recession is now the ‘most likely outcome for the economy and I cannot imagine being a victim of circumstances. My portfolio suffered a big hit, holding it further won’t be any good. I've heard of people netting hundreds of thousands this red season. How can I ensure this?
Stack your sats before it’s too late.
A recession has been "coming" since 2017.
The cause of this recession is most likely external. The United States is losing influence as a government reserve currency for the first time in decades. Less money is being spent on stock and oil trading than in the past, and there are no more economies to utilize to control inflation. They all provide evidence in favor of the theory that a new multilateral global order is being created.
We are in a recession. People can’t buy houses or even used cars. We are in the road of keeping inflation stable or risking a Great Depression. The supply chain broke and shows how easy it is for the world to cripple with a simple cough.
They have been predicting an imminent recession for over 2 yrs now. Since mid 2021 cnbc, mainstream media, financial media, various CEO’s of large corporations, heads of banks, and investing firms, etc have gone on record predicting an imminent recession in the 2nd half of 2021, the end of 2021, the start of 2022, the middle of 2022, the end of 2022, the start of 2023, the middle of 2023, and now the end of 2023. These predictions have been wrong for over 2 years at what point is it not economic analysis but wish casting?
Nah..
Is it just me, but haven't they been saying the same every year for like ever?
To combat the negative effect of inflation, it’s a good idea to diversify your portfolio across different asset classes, such as stocks, bonds, and real estate, since this can help protect your portfolio against inflation. I’ve heard testimonies of people accruing over $550k during recessions
Recession fears mount on Wall Street and inflation remains well above the Fed's 2% target, some of the top commentators in markets, business, and economics have been sounding bad off on just how worse they think the economy would get — and how far stocks may have to fall. I need ideas and advice on how to profit from this current economic predicament.
RECESSION IS COMING BECAUSE THE DEMOCRATS HAVE DESTROYED OUR BEAUTIFUL ECONOMY!
It’s coming because the Fed wants it.
vous n'avez pas entendu parler de KAYLATABITHARODRIGUES ? C'est une spécialiste du commerce expérimentée qui m'a aidé à faire de bons profits, avec ses stratégies, vous n'avez pas à vous soucier
J'ai fait quelques découvertes sur elle, elle semble vraiment connaître son affaire. formation, les qualifications étaient vraiment impressionnantes. Bravo et merci pour le partage. Je lui ai laissé un mot et j'ai réservé une consultation.
BS! PSNBC doesnt know crap. Biden said the economy is great.
We are already in a recession will are on the verge of a depression.
The fed has been manipulating the numbers since they took us off the gold standard.
The fed and their fake fiat dollar will be destroyed.
How much longer do I have to wait on this recession they’ve been predicting for the last 18 months?
It is happen as expected! The great recession is coming!
It’s already here lol
Higher interest rates, concerns about a possible recession and instability in the banking system have plagued smaller stocks. I'm still at a crossroads deciding if to invest $400k on my stock portfolio. what’s the best way to take advantage of the market?
Joe is drunk!
Drunk as a skunk