Stocks price will fall?

The Steepening Yield Curve Has A Message About Stocks

An inverted yield curve has long been Wall Street’s crystal ball, foretelling recessions with an accuracy that could make Nostradamus green with envy.

Issue is, it won’t tell you when the recession will hit. For that, you’ll need to pay close attention to when the curve begins to steepen again, particularly if it’s still upside down.

This telling change could happen either because short-term rates begin to drop faster than longer-term ones (that’s a “bull steepening”, because falling rates usually boost bond prices), or because longer-term rates start to rise faster than shorter-term ones (that’s a “bear steepening”).

If the steepening is driven by the former, it’s likely because markets are bracing for the central bank to slash interest rates in a near-frantic effort to stave off an economic meltdown. If it’s driven by the latter, it typically suggests investors are getting cold feet about longer-term debt, possibly because of higher risks of inflation or default.

Both have had a knack for correctly predicting an approaching recession – and, as often, an upcoming dip in stock prices.

I’m sharing this now because lately, the curve hasn’t just been inverted, it’s been getting steeper. And, look, that steepening has stalled a bit recently, but if it kicks into gear again, you can take that as a strong heads-up from the markets.

Now, sure, the economy’s driven by a laundry list of factors – and this inverted-but-steepening signal isn’t foolproof. It could be ringing the bell too soon, say, or it could be sounding a false alarm. Maybe this time actually will be different, as those famous last words often go