Albert Edwards: This Was The Final Recessionary Shoe, And It Has Now Fallen
by Tyler Durden
ZeroHedge.com
Thu, 06/27/2019
Exactly three months ago, in late March, the 3 month-10 year spread inverted for the first time since 2007…
However, while the inversion was certainly a memorable event, the question on everyone’s lips is how do risk assets perform once the curve flattens and/or inverts. According to backtests from Goldman, since the mid-1980s, significant stock drawdowns (i.e. market crashes) began only when term slope started steepening after being inverted.
In other words, as we noted then, “Curve Inversion Is Bad, But It’s The Steepening After That Kills.”
Fast forward to today, when in his latest bearish missive, SocGen’s permabear Albert Edwards picks up where we left off, and in a note titled “the final recession shoe has now fallen”, he notes that while inversion of the US yield curve is seen as a reliable precursor to US recessions, “it has a long and variable lead time”, and instead “a far more immediate and present danger of recession occurs when after inversion, a rapid steepening occurs.”
The Rest…HERE
Sound familiar?
The Rest…HERE
