‘Completely misguided’: Seven investors on whether the yield curve forecasts recession
US 10-year yield falling below 2-year for first time in a decade sparks recession panic
“Now before we get too carried away with the yield curve and its magical predictive qualities, we have learned that this cycle is different and that we must challenge conventional wisdom. So, here is a glimmer of hope. Historically the banks have held significantly less capital and have very quickly turned the lending taps off as the economic environment has changed. Nowadays their capital bases and risk procedures are far more suited to lending through the cycle, which is what regulators want them to do. So maybe they will not be as trigger happy as they have been in past. But can leopards change their spots? Unfortunately, the answer is probably not.
“The yield curve inversion is totally justified in our opinion given the weight of geopolitical events, and one thing absolutely for sure is that an inverted curve is not good news. The only question is how bad this news is, and how it might transmit and foster further economic concern.”