Risk of Recession
Inversions of key parts of the Treasury yield curve – which occur when yields on shorter-term Treasuries exceed those for longer-dated government bonds.
Historically, yield curve inversions have occurred prior to to recessions, as investors selling out of short-dated Treasurys in favor of long-dated government bonds signals concerns about the health of the economy.
However, it was also said that Fed bond-buying — along with quantitative easing programmes from other central banks around the world — has muddied the yield curve’s predictive powers.
So what can we do as investor? If we believe that recession is on the cards in the next 12 months, then we need to consider to recession proof our holding to guard against asset erosion.
Historically, yield curve inversions have occurred prior to to recessions, as investors selling out of short-dated Treasurys in favor of long-dated government bonds signals concerns about the health of the economy.
However, it was also said that Fed bond-buying — along with quantitative easing programmes from other central banks around the world — has muddied the yield curve’s predictive powers.
So what can we do as investor? If we believe that recession is on the cards in the next 12 months, then we need to consider to recession proof our holding to guard against asset erosion.
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