UPDATE: Stocks tank as another recession warning surfaces
Last edited Wed Aug 14, 2019, 04:11 PM - Edit history (1)
Source: Washington Post
U.S. stocks tumbled at open Wednesday after the inverted yield curve, one of the most reliable indicators of a recession, sparked a new wave of investor fears, erasing the short-lived bump from Tuesday's trade easing.
For the first time since 2007, the yields on short-term U.S. bonds eclipsed those of long-term bonds. This phenomenon, which suggests investors' faith in the economy is faltering, has preceded every recession in the last 50 years. Recessions typically come within 18 to 24 months after the yield curve inverts, according to research from Credit Suisse. "The 3-month Treasury bill to 10-year note curve has been inverted for weeks now and with the inversion of the 2-year to 10-year curve. The stars are aligned across the curve that the economy is headed for a big fall," said Chris Rupkey, chief financial economist at MUFG Union Bank. "The yield curves are all crying timber that a recession is almost a reality, and investors are tripping over themselves to get out of the way."
The Dow Jones industrial average slumped nearly 400 points at open Wednesday, a day after it notched its best performance in two months. The Standard & Poor's 500 index was down more than 1.4 percent and the tech-heavy Nasdaq was down more than 1.6 percent. Bank stocks slumped off the news. Bank of America and Citigroup saw their shares sink more than 3 percent and JP Morgan's shares fell 2.6 percent. Gold, a safe-haven for investors, rose. And the influx of investors scrambling for safety pushed U.S. 30-year Treasury yields to their lowest level ever.
Darkening skies overseas gave investors more to worry about. Germany announced Wednesday that its economy had shrunk, blaming the drop-off on the fallout from the U.S.-China trade war and the looming threat of a hard Brexit. The European Stoxx 600 benchmark was down nearly 6 percent in midday trading. China reported more signs of a weakening economy Wednesday, with high unemployment and lower production and investment markers, fanning the flames of fears about a broader global slowdown as the protracted trade conflict appears to be stalling some of the world's most powerful economies.
Read more: https://www.washingtonpost.com/business/2019/08/14/stocks-tank-another-recession-warning-surfaces/
UPDATE at the close -
By Damian Paletta, Thomas Heath and Taylor Telford
August 14 at 4:02 PM
The global economy has begun to shudder. On Wednesday, the U.S. stock market tumbled after a reliable predictor of looming recessions flashed for the first time since the 2008 financial crisis. The Dow Jones industrial average fell around 800 points, or 3 percent, and has lost close to 7 percent in the past three weeks.
Two of the world's largest economies, Germany and the United Kingdom, appear to be contracting. Argentina's stock market fell nearly 50 percent in recent days, and growth in China has slowed.
Whether the events presage an economic calamity or just an alarming spasm are unclear. But unlike during the Great Recession, global leaders are not working in unison to confront mounting problems and arrest the slowdown. Instead, they are increasingly at each other's throats. And President Trump has responded by both claiming the economy is still thriving while dramatically ramping up his attacks on Federal Reserve Chairman Jerome Powell, seeking to deflect blame.
Wednesday's sharp selloff was caused by an unusual development in the bond market, called an "inverted yield curve," that often foreshadows a recession.
https://www.washingtonpost.com/business/2019/08/14/stocks-tank-another-recession-warning-surfaces/
Original article and headline -
By Washington Post Staff
August 14 at 9:30 AM
All major stock indexes sank after the yield on the 10-year Treasury bond fell below the rate on the 2-year Treasury bond.
This phenomenon, known as an inverted yield curve, has been a reliable, early indicator of a recession. It last occurred before the 2008 Great Recession.
This is a developing story. It will be updated.
https://www.washingtonpost.com/news/business/wp/2019/08/14/u-s-markets-tumble-after-key-indicator-triggers-recession-worries/
From Marketwatch this morning -
Published: Aug 14, 2019 6:58 a.m. ET
The U.S. 2-year Treasury note yield TMUBMUSD02Y, -4.62% traded above the 10-year note yield TMUBMUSD10Y, -5.75% for the first time in over a decade early Wednesday, reinforcing recession worries. The flattening of the main measure of the U.S. Treasury yield curve already spelled trouble for stock-market investors that have been on the back foot from escalating geopolitical concerns and simmering trade tensions, analysts at Bank of America Merrill Lynch said in a Tuesday note ahead of the inversion.
The inversion of the main measure of the yield curve, or a negative spread between short-term and long-term yields, means a recession indicator is flashing red. "The equity market is on borrowed time after the yield curve inverts," the BAML strategists wrote. The yield on the 10-year Treasury note was down 5.7 basis points at 1.619%, according to FactSet, while the 2-year yield was off 4.1 basis points at 1.628%.
An inverted yield curve often serves as a prelude to a recession because it indicates when monetary policy and financial conditions are too tight for the broader economy. A yield curve inversion along the 2-year/10-year spread has come before the last seven recessions. Still, the widely varying lag times between an inversion and an economic downturn makes it difficult to say if an inverted curve points to an imminent slowdown in growth.
Other yield curve measures have already inverted this year. Since May, the 3-month/10-year spread measure utilized by the New York Federal Reserve to analyze recession probabilities has been mostly stuck in negative territory. But investors had previously pointed to the lack of an inversion on the 2-year/10-year spread as a sign that the bond-market was not pointing to a shuddering halt to economic growth. Rather, it suggested hopes that the Federal Reserve would secure a soft-landing for a U.S. economy through "insurance" interest rate cuts.
https://www.marketwatch.com/story/the-us-treasury-2-10-year-yield-spread-is-about-to-invert-and-that-means-stocks-are-on-borrowed-time-says-baml-2019-08-13?modmw_theo_homepage
= new reply since forum marked as read
I hope more take notice and not ignore these things like they did in 2007. 
22 months . . . or soooooooooooooooooo.
Sounds it is slowly happening now.
“
re·ces·sion
/rəˈseSH(ə
n/
Learn to pronounce
noun
1.
a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.”
I guess you could split hairs between the nuance between “fall” and “negative”, but otherwise, my statement was accurate.
I was two inches from homeless for three years..
I make good money, but I'm still paying off debt from that recession....my hubby at the time and I both worked in the housing market - he in construction and me in real estate (I was a new agent) and also flooring....we both got laid off - my listings wouldn't sell - they were over priced and the sellers couldn't lower the prices cause they were up side down.....under pressure from my broker i ran up credit cards trying to get those sold....didn't work....the hubby sank into severe alcoholism and I left for my own safety.....I no longer had any money, a house, a husband, a job.....i had a little bit of unemployment is all....i completely started over - rented a room from a family, wound up in an unhealthy relationship just because the guy and I couldn't afford to live separately....
three years after I left - I got a job
Im still paying off the judgements, I'm paycheck to paycheck still even though I now have a husband, house + car again.....I'm the breadwinner of the house - left real estate/housing - back in HR at a bio-research organization....
sometimes I get really angry - that ive played by the rules - ive worked so hard for 35 years....and this threat hangs over our heads every time a republican gets in the white house....
all he had to do was nothing....
There's your indicator people. Proof that Wall Street made out like bandits as Main Street closes up shop.
What will the Orange Pile of Shit say next? It's China's fault?
So much winning....
Since Trump is bringing back so many jobs in those areas.
