In the last recession, the spread went negative a couple of different times before rising. We also can see a false positive in 1998 where the spread went negative for a short period. The lead time for recessions is quite a range - after going negative, recessions have begun anywhere from 16 to 62 weeks later. Typically, the spread goes negative for a period and then out of the red prior to recessions. The S&P 500 fell 5.16% that Friday and 20.47% on Black Monday. Note the 1987 closing high on the Friday before the notorious Black Monday market crash. Here is a long look since 1965, starting well before the 1973 Oil Embargo that triggered the era of "stagflation" (economic stagnation with inflation). A Long-Term Look at the 10-Year Note YieldĪ log-scale snapshot of the 10-year yield offers a more accurate view of the relative change over time.
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