We're quickly approaching all time lows on the 10yr-2yr yield inversion chart. However, in the past the rates inverted at the end of the rate hike cycle. This time we inverted from the start of the hikes and aren't even half way to the Fed's goal of 3.5%. So we are in uncharted territory with the bond market.
Note, crashes followed the yield inversion, as rates started falling. The crashes happened anywhere from immediately to 2 years after initial inversion, but 6 months seems to be the median. Does that mean we run up and/or chop sideways until rates come down? Perhaps. however it tells me we're due for another crash when the yield turns positive again.
I'm not sure what to make of the rate hike bear trend line, but we are about to breakout of it, for sure. Perhaps we get more hikes than we bargained for. However, inflation numbers should improve soon with oil & metal prices falling, while food is about to go through harvest season. I anticipate some bull run off that. Inflation relief might be short lived, however.
Note, crashes followed the yield inversion, as rates started falling. The crashes happened anywhere from immediately to 2 years after initial inversion, but 6 months seems to be the median. Does that mean we run up and/or chop sideways until rates come down? Perhaps. however it tells me we're due for another crash when the yield turns positive again.
I'm not sure what to make of the rate hike bear trend line, but we are about to breakout of it, for sure. Perhaps we get more hikes than we bargained for. However, inflation numbers should improve soon with oil & metal prices falling, while food is about to go through harvest season. I anticipate some bull run off that. Inflation relief might be short lived, however.
