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- We get more and more signals of an approaching recession
We get more and more signals of an approaching recession
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Loading...Another signal we get about an approaching recession. 10-year bonds continue to fall, as their curve has already crossed that of the Federal Reserve's main interest rate. As shown on the chart, this event precedes the recessions of the past. As soon as this intersection occurs, the recession occurs after two to three years.
This still does not bother stock markets. Last days' sell-off is entirely due to the escalation of the war.
The VIX curve - the fear index - again turned into a negative territory, indicating that investors are starting to move to security tools again. The Federal Reserve is back in the background, with markets now focusing on the US and China again. The concern for the world economy will not be delayed again by the market participants as well as the talk of the approaching recession.
In addition to the signals of economic shocks, the Kansas production index is approaching threateningly to the levels that signal the subsequent recession.
And last but not least ... the cheap resources drag along with the world PMI.
We see a full synchronization between the price of copper and Global PMI. With the reduction of PMI, the price of copper decreases. The dependence is that, in reducing global economic austerity, the demand for valuable and industrial metals is also diminishing. Copper as the main barometer of the state of the world economy is being taken with extreme caution. Its downsizing is not a good signal. The reduction of Global PMI leads to a reduction of PMI by region, which leads to a decrease in GDP. And do we have a reduction in GDP for at least three consecutive quarters, we have a recession.
Graphs: Used with permission of Bloomberg Finance L.P.
Trader Martin Nikolov Read more:
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