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Yieldcurveinversion

National Activity Index, SPX, & the 10 year yieldThis long term chart compares the SPX (orange), US10Y (white) and the Fed's National Activity Index (blue). Note the extended periods of the NAI which remain below 0 marking recession. The 10 year yield tends to peak well in advance of the next recession. On a daily basis we see ongoing concern about the 10y-3mo inverted yield curve as an indication of looming recession. (However we've yet to see inversion of the 10-2 slice of the curve.) Despite the low unemployment rate of 3.6%, there has been sharp rise in expectations for Fed cuts in the next 6 months. Moodys: "The implied probability of a fed funds rate cut at the Federal Open Market Committee’s July 31 meeting recently soared to 72% mostly in response to Jerome Powell’s apparent willingness to heed the recessionary warning of a possibly persistently inverted yield curve." A declining economy would result in falling inflation expectations and lower prices for materials and products. Recessions are often slow to arrive, often 12 to 18 months after a treasury yield curve inversion occurs.
TVC:US10Y
by dime
Dow - Head and Shoulder BreakdownThe very famous chart formation again happen in Dow Futures. The pattern target is eyeing 23842 with conservative projection from left shoulder instead of right shoulder. However, if price hit 23842, it will be 50% retracement from the previous swing. In a longer term view, S&P 500 have divergence and yet to confirm. In Dow Jones, the head and shoulder pattern accompany with triple top foppish formation. With yield curve continue to steepen inverting. Equities traders or longer term investors must aware the increasing market risk. VIX is likely to travel higher.
CBOT_MINI:YM1!
by Johnkiew
Is a crash still possible at all?In this screencast I show two charts where crashes could happen. I focus on Wall Street which - affects markets globally including forex markets. On the weekly time frame US Oil is beginning to struggle at a 61.8% Fib retracement. Wall Street is possibly struggling at an important structure level. A whole lot depends on China. But dig deeper. See the CSI300 losing steam with some RSI divergence. So while one bunch of hopefuls are punching north based on news of the China deal coming to fruition, there are distant influences that could come to bear on Wall Street from the Chinese markets. Then enter the 'inverted yield curve'. fred.stlouisfed.org This is the most reliable indicator of recessions (not necessarily market crashes). I am reliably informed that the inverted yield curve has heralded every economic down turn since the second world war. But life is not so simple. Some say that the yield curve needs to remain inverted for 3 months if it is to be meaningful. Well, I don't know. In any event the Wall Street cycle is overdue its 'economic winter' just based on its own cyclical pattern (which is between 5 to 7 years). We're past year 10 at this point in time. Stock markets head south before recessions are realised.
Short
by Captain_Walker
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