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13 for the first time since 2007, with the two-year yield surpassing the 10-year yield by one basis point. 14 reached an all-time low of 2.053 percent, on fears about a sustained economic slowdown. The tit-for-tat nature of the trade war has firms feeling uncertain about the future. “When you have businesses and consumers who feel less confident about the future, they have a lower propensity to spend.
They’ve reportedly delayed investments and – in some cases – hiring, Federal Reserve Chairman Jerome Powell pointed out during the Fed’s post-meeting news conference on July 31. That’s when we start to see a contraction in growth.” There’s no shortage of studies out there.
In this case, they think it’s riskier to hold their bond over the shorter-term.
Traders, economists and strategists alike watch this curve because it has a particular track record for preceding downturns.
Deeper within the report is what some economists say is a leading indicator: the number of hours worked. When the economy slows, businesses are getting worried about future sales,” Sweet says.
“The first thing they cut are hours.” Temporary help is another good measure, Sweet says.
Most experts say there’s no need to panic just yet, but there are a number of datasets you may want to watch to help signal future economic shocks.
They’re generally referred to as “indicators,” and they’re what experts read when trying to spot-check the health of the national economy.
One of the most closely watched indicators of an impending recession is the “yield curve.” A yield is simply the interest rate on a bond, or Treasury. government issuing these securities compensates investors for risks – is higher on a bond with a longer maturity.
The Organization for Economic Cooperation (OECD) also publishes its own survey for businesses.
Consumer confidence remains historically elevated, though it tumbled in early 2019 as a result of the lengthy government shutdown. Meanwhile, the OECD’s business confidence index dipped below 100 for the first time since 2016, which indicates that businesses are starting to feel pessimistic about future performance. It can be important if confidence slides, but mostly for the longer term, says Ryan Sweet, director of real-time economics at Moody’s Analytics.
There are two main yield curves that investors follow for their predictive power: the 10-year and three-month Treasury rate, and the two-year and 10-year Treasury yield.
The 10-year, three-month spread inverted on March 22 for the first time since 2007, but it soon recovered.