10 Year/3 Month Treasuries Inversion

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jminv
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10 Year/3 Month Treasuries Inversion

Post by jminv »

For those who care about such things, the 3 month and 10 year treasuries inverted this morning (2.465% versus 2.453% as I write this). This is, incidentally, the spread the Fed uses for it's recession probability estimate (rather than the 2 year and 10 year spread which is still slightly positive).

There are a few news stories now that I look for them eg https://www.bloomberg.com/news/articles ... since-2007 or https://www.cnbc.com/2019/03/22/us-bond ... -data.html.

To keep it actionable, how would you react to this? For me, it's a reminder to ensure that your chosen asset allocation is one that you are comfortable with.
carol-brennan
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Re: 10 Year/3 Month Treasuries Inversion

Post by carol-brennan »

I've been trying to warn people for weeks/months that it's getting risky out there.

Funny how at the top people just ride along like nothing is going to change. After a decade of QE and with interest rates low here here and 0 or below 0 in most of the industrialized world, the Fed is already out of conventional ammo. The next downturn is going to be ugly.

As things get worse, the trillions in bad corporate debt are going to bring down the system just like the housing bubble did in 2008.

https://www.forbes.com/sites/robisbitts ... different/

https://www.economist.com/briefing/2019 ... t-mountain

My advice: know your true risk tolerance. If you don't know it, you will soon enough. And then you will have paid the price that many of us have to pay over time.

Here's some actionable advice: Imagine the equity portion of your portfolio decreasing by 50-75 percent and staying down for a decade. How do you feel about that? Okay? If not, then your exposure to equity is too great.
Last edited by carol-brennan on Fri Mar 22, 2019 9:39 am, edited 1 time in total.
ohai
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Re: 10 Year/3 Month Treasuries Inversion

Post by ohai »

In general, do little with allocation. Stock prices already price recession risk better than you do. Lower rates probably justifies a lower allocation to bonds.
carol-brennan
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Re: 10 Year/3 Month Treasuries Inversion

Post by carol-brennan »

ohai wrote: Fri Mar 22, 2019 9:38 am In general, do little with allocation. Stock prices already price recession risk better than you do. Lower rates probably justifies a lower allocation to bonds.
People who are buying bonds yielding less than 0 don't agree with you. Why do you think they're buying them? Because they like losing money?
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Re: 10 Year/3 Month Treasuries Inversion

Post by ohai »

I don't understand your comment. You don't need to agree with everyone. People have different motivations. Some people receive -1% to shelter their assets in Switzerland. This doesn't mean you have to do it too.

When rates were below SPX dividend yields 1-2 years ago, institutional managers were net short bonds. They believed such low borrowing rates were better for leverage than investing.

You don't have to agree with this.
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Re: 10 Year/3 Month Treasuries Inversion

Post by oldcomputerguy »

jminv wrote: Fri Mar 22, 2019 9:29 am To keep it actionable, how would you react to this?
I'm going to react to it by rinsing out my morning coffee cup, putting on my jacket, and going out to the walking track to do my daily 2-mile brisk walk.
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michaeljc70
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Re: 10 Year/3 Month Treasuries Inversion

Post by michaeljc70 »

I won't be doing anything. An inverted yield curve historically occurs 2-3 years before a recession is even called. It can also be a temporary blip and the curve could go back to "normal" tomorrow.
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jminv
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Re: 10 Year/3 Month Treasuries Inversion

Post by jminv »

michaeljc70 wrote: Fri Mar 22, 2019 9:52 am I won't be doing anything. An inverted yield curve historically occurs 2-3 years before a recession is even called. It can also be a temporary blip and the curve could go back to "normal" tomorrow.
When there has been a recession preceeded by an inversion, the range between the inversion and the start of a recession since 1970 has been 5-17 months. Of course, a recession doesn't have to follow an inversion and the future won't necessarily follow the past.

https://www.advisorperspectives.com/art ... -investors

Fed 10 year minus 3 month spread with recessions in grey.
https://fred.stlouisfed.org/series/T10Y3M
Last edited by jminv on Fri Mar 22, 2019 10:06 am, edited 1 time in total.
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Re: 10 Year/3 Month Treasuries Inversion

Post by vineviz »

jminv wrote: Fri Mar 22, 2019 10:00 am When there has been a recession followed by an inversion. . .
Did you mean "inversion followed by a recession"? That's usually the progression, IIRC.
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jminv
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Re: 10 Year/3 Month Treasuries Inversion

Post by jminv »

vineviz wrote: Fri Mar 22, 2019 10:04 am
jminv wrote: Fri Mar 22, 2019 10:00 am When there has been a recession followed by an inversion. . .
Did you mean "inversion followed by a recession"? That's usually the progression, IIRC.
Yes, I did, thanks. English is not my native language, I still make mistakes sometimes.
michaeljc70
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Re: 10 Year/3 Month Treasuries Inversion

Post by michaeljc70 »

jminv wrote: Fri Mar 22, 2019 10:00 am
michaeljc70 wrote: Fri Mar 22, 2019 9:52 am I won't be doing anything. An inverted yield curve historically occurs 2-3 years before a recession is even called. It can also be a temporary blip and the curve could go back to "normal" tomorrow.
When there has been a recession preceeded by an inversion, the range between the inversion and the start of a recession since 1970 has been 5-17 months. Of course, a recession doesn't have to follow an inversion and the future won't necessarily follow the past.

https://www.advisorperspectives.com/art ... -investors

Fed 10 year minus 3 month spread with recessions in grey.
https://fred.stlouisfed.org/series/T10Y3M
My timeframe was from Forbes:

https://www.forbes.com/sites/simonmoore ... on-signal/

"A negative yield curve has historically been reached 2-3 years before a U.S. recession is officially recognized."

I'm not sure why you started at 1970.
dkturner
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Re: 10 Year/3 Month Treasuries Inversion

Post by dkturner »

jminv wrote: Fri Mar 22, 2019 10:00 am
michaeljc70 wrote: Fri Mar 22, 2019 9:52 am I won't be doing anything. An inverted yield curve historically occurs 2-3 years before a recession is even called. It can also be a temporary blip and the curve could go back to "normal" tomorrow.
When there has been a recession preceeded by an inversion, the range between the inversion and the start of a recession since 1970 has been 5-17 months. Of course, a recession doesn't have to follow an inversion and the future won't necessarily follow the past.

https://www.advisorperspectives.com/art ... -investors

Fed 10 year minus 3 month spread with recessions in grey.
https://fred.stlouisfed.org/series/T10Y3M
From the Federal Reserve graph it looks like an inverted yield curve is an accurate predictor of an oncoming recession.
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vineviz
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Re: 10 Year/3 Month Treasuries Inversion

Post by vineviz »

jminv wrote: Fri Mar 22, 2019 10:07 am
vineviz wrote: Fri Mar 22, 2019 10:04 am
jminv wrote: Fri Mar 22, 2019 10:00 am When there has been a recession followed by an inversion. . .
Did you mean "inversion followed by a recession"? That's usually the progression, IIRC.
Yes, I did, thanks. English is not my native language, I still make mistakes sometimes.
It's cool. Economics is the universal language anyway. :-)
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
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vineviz
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Re: 10 Year/3 Month Treasuries Inversion

Post by vineviz »

michaeljc70 wrote: Fri Mar 22, 2019 10:15 am My timeframe was from Forbes:

https://www.forbes.com/sites/simonmoore ... on-signal/

"A negative yield curve has historically been reached 2-3 years before a U.S. recession is officially recognized."
I think you are both on the same page.

For recessions that follow an inversion, the recession typically starts about 6 to 18 months after the inversion.

It generally takes another 6 to 18 months for the NBER to recognize that the recession started.

I don't agree that the inversion is an actionable event, necessarily, but this has been the general sequence of events historically.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
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Re: 10 Year/3 Month Treasuries Inversion

Post by MichCPA »

What it means is that my girlfriend might get a chance to refi those student loans at a lower rate in the next year. :beer
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Re: 10 Year/3 Month Treasuries Inversion

Post by Taj_Mahalo »

jminv wrote: Fri Mar 22, 2019 10:00 am Fed 10 year minus 3 month spread with recessions in grey.
https://fred.stlouisfed.org/series/T10Y3M
Thanks for the chart - helpful to visualize what this could mean.
dkturner wrote: Fri Mar 22, 2019 10:18 am From the Federal Reserve graph it looks like an inverted yield curve is an accurate predictor of an oncoming recession.
It sure looks that way :shock:

As far as how I'll react, well, I'm in the accumulation phase so I'll try my best to stay the course and take advantage of some low equity prices...assuming I'm able to remain employed.
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Re: 10 Year/3 Month Treasuries Inversion

Post by MichCPA »

vineviz wrote: Fri Mar 22, 2019 10:24 am
I don't agree that the inversion is an actionable event, necessarily, but this has been the general sequence of events historically.
I would say that if you are following sound financial principles with regard to asset allocation, diversification, and maintaining an emergency fund, nothing has changed.

Its just that those things really have not seemed necessary when everything is going up.
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Re: 10 Year/3 Month Treasuries Inversion

Post by carol-brennan »

vineviz wrote: Fri Mar 22, 2019 10:24 am I don't agree that the inversion is an actionable event
The stock and bond markets are disagreeing heartily with you.

Investors today realize, I hope, what a gift they were handed in 2008/09 by Bernanke et al. QE, taxpayer-funded corporate bailouts, and below 0 interest rates were NOT "business as usual" in the fight against downturns. They were extraordinary measures. Now that they've been used, QE not unwound, and interest rates still historically low, what are investors imagining is going to happen to pull us out of the next downturn?

And once the ball gets rolling downhill and the massive corporate debt bubble is popped, yikes.
Last edited by carol-brennan on Fri Mar 22, 2019 10:42 am, edited 1 time in total.
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Re: 10 Year/3 Month Treasuries Inversion

Post by vineviz »

carol-brennan wrote: Fri Mar 22, 2019 10:34 am
vineviz wrote: Fri Mar 22, 2019 10:24 am I don't agree that the inversion is an actionable event
The stock and bond markets are disagreeing heartily with you.
If financial markets have already adjusted for the increased likelihood of future recession, what action is left for you to take?

Any investment action you can take NOW is a direct bet that the stock and bond markets have gotten something wrong. You might be willing to take that bet, but I'm not.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
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Re: 10 Year/3 Month Treasuries Inversion

Post by Tdubs »

vineviz wrote: Fri Mar 22, 2019 10:24 am
michaeljc70 wrote: Fri Mar 22, 2019 10:15 am My timeframe was from Forbes:

https://www.forbes.com/sites/simonmoore ... on-signal/

"A negative yield curve has historically been reached 2-3 years before a U.S. recession is officially recognized."
I think you are both on the same page.

For recessions that follow an inversion, the recession typically starts about 6 to 18 months after the inversion.

It generally takes another 6 to 18 months for the NBER to recognize that the recession started.

I don't agree that the inversion is an actionable event, necessarily, but this has been the general sequence of events historically.
Are these time frames for a 2 year-10 year inversion or a 3 month-10 year?
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Re: 10 Year/3 Month Treasuries Inversion

Post by robertmcd »

carol-brennan wrote: Fri Mar 22, 2019 10:34 am
vineviz wrote: Fri Mar 22, 2019 10:24 am I don't agree that the inversion is an actionable event
The stock and bond markets are disagreeing heartily with you.

Investors today realize, I hope, what a gift they were handed in 2008/09 by Bernanke et al. QE and below 0 interest rates were NOT "business as usual" in the fight against downturns. They were extraordinary measures. Now that they've been used, QE not unwound, and interest rates still historically low, what are investors imagining is going to happen to pull us out of the next downturn?
It's quite simple actually. There are plenty of options including negative interest rates, a Fed balance sheet around 8-10 trillion, Fed expanding to buying corporate bonds and equities. So don't worry unless you are holding cash. You need some duration so you can earn a capital gain because your cash is set to devalue once again.
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Re: 10 Year/3 Month Treasuries Inversion

Post by TheTimeLord »

jminv wrote: Fri Mar 22, 2019 9:29 am For those who care about such things, the 3 month and 10 year treasuries inverted this morning (2.465% versus 2.453% as I write this). This is, incidentally, the spread the Fed uses for it's recession probability estimate (rather than the 2 year and 10 year spread which is still slightly positive).

There are a few news stories now that I look for them eg https://www.bloomberg.com/news/articles ... since-2007 or https://www.cnbc.com/2019/03/22/us-bond ... -data.html.

To keep it actionable, how would you react to this? For me, it's a reminder to ensure that your chosen asset allocation is one that you are comfortable with.
Ignore posts like this.
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Re: 10 Year/3 Month Treasuries Inversion

Post by dmcmahon »

carol-brennan wrote: Fri Mar 22, 2019 9:40 am
ohai wrote: Fri Mar 22, 2019 9:38 am In general, do little with allocation. Stock prices already price recession risk better than you do. Lower rates probably justifies a lower allocation to bonds.
People who are buying bonds yielding less than 0 don't agree with you. Why do you think they're buying them? Because they like losing money?
Well, even bonds that nominally pay a positive rate are losing you purchasing power after you pay taxes on the paltry interest, and then account for what inflation did to the principal. I still buy them because I have to have them as ballast for my equity portfolio.
Last edited by dmcmahon on Fri Mar 22, 2019 11:00 am, edited 1 time in total.
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Re: 10 Year/3 Month Treasuries Inversion

Post by Ketawa »

TheTimeLord wrote: Fri Mar 22, 2019 10:44 am
jminv wrote: Fri Mar 22, 2019 9:29 am For those who care about such things, the 3 month and 10 year treasuries inverted this morning (2.465% versus 2.453% as I write this). This is, incidentally, the spread the Fed uses for it's recession probability estimate (rather than the 2 year and 10 year spread which is still slightly positive).

There are a few news stories now that I look for them eg https://www.bloomberg.com/news/articles ... since-2007 or https://www.cnbc.com/2019/03/22/us-bond ... -data.html.

To keep it actionable, how would you react to this? For me, it's a reminder to ensure that your chosen asset allocation is one that you are comfortable with.
Ignore posts like this.
+1. These threads are so frustrating. The U.S. stock market is about 3.5% off its peak set in September last year. Ignore the noise.
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Re: 10 Year/3 Month Treasuries Inversion

Post by dmcmahon »

carol-brennan wrote: Fri Mar 22, 2019 10:34 am And once the ball gets rolling downhill and the massive corporate debt bubble is popped, yikes.
Well one action that I personally have taken is to avoid taking any credit risk in bonds. So I don't own any of those lower-quality corporates.

If interest rates are headed down to zero or below, exactly how is that going to pop the bubble?

Another question, do the people predicting an implosion account for all the cash some corporations have and factor that out of the overall debt? Because a lot of cash-rich multinationals borrowed domestically to fund buybacks and such, even though they had plenty of cash on the balance sheet overseas, due to the US's non-territorial tax system.
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Re: 10 Year/3 Month Treasuries Inversion

Post by robertmcd »

Stocks have a long way to catch down to bonds if bonds are correct.
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Re: 10 Year/3 Month Treasuries Inversion

Post by Tigermoose »

MichCPA wrote: Fri Mar 22, 2019 10:26 am What it means is that my girlfriend might get a chance to refi those student loans at a lower rate in the next year. :beer
I would love to refinance my mortgage if we can get rates down! Every situation offers an opportunity for the well diversified!
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Re: 10 Year/3 Month Treasuries Inversion

Post by boglewill34 »

I'll follow mortgage rates and maybe refinance. Circumstantially I can't now.
I'll keep looking at one ultra short duration bond etf that I've been considering investing in to see where it goes vs cash.
I will strongly consider converting pre-tax to Roth if there is a resultant strong bear market.
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Re: 10 Year/3 Month Treasuries Inversion

Post by Doc »

Tigermoose wrote: Fri Mar 22, 2019 10:55 am I would love to refinance my mortgage if we can get rates down! Every situation offers an opportunity for the well diversified!
Oh great idea Tigermoose. You get out of that high interest rate mortgage and I take the hit in my MBS fund. :D

It's a two way street.
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Re: 10 Year/3 Month Treasuries Inversion

Post by Time2Quit »

I saw a Shiller video clip on CNBC and he was saying he would be surprised if a recession did not start in the next 6 months. He then qualified it saying making future predictions is hard, however the data points to the recession. :confused
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Re: 10 Year/3 Month Treasuries Inversion

Post by Tigermoose »

Doc wrote: Fri Mar 22, 2019 11:46 am
Tigermoose wrote: Fri Mar 22, 2019 10:55 am I would love to refinance my mortgage if we can get rates down! Every situation offers an opportunity for the well diversified!
Oh great idea Tigermoose. You get out of that high interest rate mortgage and I take the hit in my MBS fund. :D

It's a two way street.
LOL. The key to staying the course is ignoring the negatives and focusing on the positives of your well diversified portfolio :P Always look on the bright side of life.
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Re: 10 Year/3 Month Treasuries Inversion

Post by TheTimeLord »

carol-brennan wrote: Fri Mar 22, 2019 9:35 am I've been trying to warn people for weeks/months that it's getting risky out there.

Funny how at the top people just ride along like nothing is going to change. After a decade of QE and with interest rates low here here and 0 or below 0 in most of the industrialized world, the Fed is already out of conventional ammo. The next downturn is going to be ugly.

As things get worse, the trillions in bad corporate debt are going to bring down the system just like the housing bubble did in 2008.

https://www.forbes.com/sites/robisbitts ... different/

https://www.economist.com/briefing/2019 ... t-mountain

My advice: know your true risk tolerance. If you don't know it, you will soon enough. And then you will have paid the price that many of us have to pay over time.

Here's some actionable advice: Imagine the equity portion of your portfolio decreasing by 50-75 percent and staying down for a decade. How do you feel about that? Okay? If not, then your exposure to equity is too great.
A 75 percent drop puts the S&P 500 in the 700-725 range and staying there for a decade. If someone believed that the play would not be to adjust their AA.
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Re: 10 Year/3 Month Treasuries Inversion

Post by corn18 »

I like this chart (vs. a link to the chart):

Image

And I will do what I always do: just stand there. And watch all the arm waving and sky falling threads. For as simple as the BH 3 fund strategy is, we manage to talk about it for thousands of posts a day.
Consistently sets low goals and fails to achieve them.
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Re: 10 Year/3 Month Treasuries Inversion

Post by Tdubs »

corn18 wrote: Fri Mar 22, 2019 11:56 am I like this chart (vs. a link to the chart):

Image

And I will do what I always do: just stand there. And watch all the arm waving and sky falling threads. For as simple as the BH 3 fund strategy is, we manage to talk about it for thousands of posts a day.
This shows the 2 and 10-year inversions and their proximity to recessions. Today we have a 3 month and 10-year inversion.
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Re: 10 Year/3 Month Treasuries Inversion

Post by corn18 »

Tdubs wrote: Fri Mar 22, 2019 12:00 pm
corn18 wrote: Fri Mar 22, 2019 11:56 am I like this chart (vs. a link to the chart):

Image

And I will do what I always do: just stand there. And watch all the arm waving and sky falling threads. For as simple as the BH 3 fund strategy is, we manage to talk about it for thousands of posts a day.
This shows the 2 and 10-year inversions and their proximity to recessions. Today we have a 3 month and 10-year inversion.
Sorry. The 10Y3M chart looks COMPLETELY different!

Image
Consistently sets low goals and fails to achieve them.
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Re: 10 Year/3 Month Treasuries Inversion

Post by Grt2bOutdoors »

carol-brennan wrote: Fri Mar 22, 2019 9:40 am
ohai wrote: Fri Mar 22, 2019 9:38 am In general, do little with allocation. Stock prices already price recession risk better than you do. Lower rates probably justifies a lower allocation to bonds.
People who are buying bonds yielding less than 0 don't agree with you. Why do you think they're buying them? Because they like losing money?
No one in the US is buying negative yielding bonds, they are buying them overseas in Europe because that's what sovereigns trade for.
You can buy 5 year treasuries with a positive nominal yield, and if inflation really does disappear those negative yielding bonds will turn positive. Keep buying. Equities are not going down by 75%, do you own gold too?
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Re: 10 Year/3 Month Treasuries Inversion

Post by Grt2bOutdoors »

Ketawa wrote: Fri Mar 22, 2019 10:52 am
TheTimeLord wrote: Fri Mar 22, 2019 10:44 am
jminv wrote: Fri Mar 22, 2019 9:29 am For those who care about such things, the 3 month and 10 year treasuries inverted this morning (2.465% versus 2.453% as I write this). This is, incidentally, the spread the Fed uses for it's recession probability estimate (rather than the 2 year and 10 year spread which is still slightly positive).

There are a few news stories now that I look for them eg https://www.bloomberg.com/news/articles ... since-2007 or https://www.cnbc.com/2019/03/22/us-bond ... -data.html.

To keep it actionable, how would you react to this? For me, it's a reminder to ensure that your chosen asset allocation is one that you are comfortable with.
Ignore posts like this.
+1. These threads are so frustrating. The U.S. stock market is about 3.5% off its peak set in September last year. Ignore the noise.
+2. Of course, the high was set back on September 20, 2018. We are only the 3.5% you indicate above, add back dividends and the market may be flat this year. I'm doing nothing right now, equities are not down far enough to consider rebalancing back to them. Next week, some news will come out about Asia and the markets will be right back up. Can't wait to hear the Berkshire Hathway livestream, wonder what the Oracle of Omaha will say. Wait, I already know "you are crazy to lock your money up for 10 years at a rate below the return on equities".
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Re: 10 Year/3 Month Treasuries Inversion

Post by Stinky »

Grt2bOutdoors wrote: Fri Mar 22, 2019 12:08 pm
Ketawa wrote: Fri Mar 22, 2019 10:52 am
TheTimeLord wrote: Fri Mar 22, 2019 10:44 am
jminv wrote: Fri Mar 22, 2019 9:29 am For those who care about such things, the 3 month and 10 year treasuries inverted this morning (2.465% versus 2.453% as I write this). This is, incidentally, the spread the Fed uses for it's recession probability estimate (rather than the 2 year and 10 year spread which is still slightly positive).

There are a few news stories now that I look for them eg https://www.bloomberg.com/news/articles ... since-2007 or https://www.cnbc.com/2019/03/22/us-bond ... -data.html.

To keep it actionable, how would you react to this? For me, it's a reminder to ensure that your chosen asset allocation is one that you are comfortable with.
Ignore posts like this.
+1. These threads are so frustrating. The U.S. stock market is about 3.5% off its peak set in September last year. Ignore the noise.
+2. Of course, the high was set back on September 20, 2018. We are only the 3.5% you indicate above, add back dividends and the market may be flat this year. I'm doing nothing right now, equities are not down far enough to consider rebalancing back to them. Next week, some news will come out about Asia and the markets will be right back up. Can't wait to hear the Berkshire Hathway livestream, wonder what the Oracle of Omaha will say. Wait, I already know "you are crazy to lock your money up for 10 years at a rate below the return on equities".
+3

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Re: 10 Year/3 Month Treasuries Inversion

Post by michaeljmroger »

carol-brennan wrote: Fri Mar 22, 2019 9:35 am Imagine the equity portion of your portfolio decreasing by 50-75 percent and staying down for a decade.
Is that what a recession is? I thought a recession was essentially the market slowing down substantially, but not necessarily crashing by like 75%.
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Doc
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Re: 10 Year/3 Month Treasuries Inversion

Post by Doc »

What is a Recession
A recession is a significant decline in economic activity that goes on for more than a few months. It is visible in industrial production, employment, real income and wholesale-retail trade. The technical defintion (sic) of a recession is two consecutive quarters of negative economic growth as measured by a country's gross domestic product (GDP), although the National Bureau of Economic Research (NBER) does not necessarily need to see this occur to call a recession.
https://www.investopedia.com/terms/r/recession.asp

Nothing about stock markets at all.
A scientist looks for THE answer to a problem, an engineer looks for AN answer and lawyers ONLY have opinions. Investing is not a science.
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Re: 10 Year/3 Month Treasuries Inversion

Post by 50/50 »

What's my action plan? Same one as always. Keep my hands off my stocks and bonds and do the best I can with my CD ladder as the rungs mature.
Thou shalt take no risks that thou needest not take. Seek wisdom not knowledge. Knowledge is of the past; wisdom is of the future.
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Re: 10 Year/3 Month Treasuries Inversion

Post by DonIce »

jminv wrote: Fri Mar 22, 2019 9:29 am To keep it actionable, how would you react to this?
Panic! Sell everything!

More seriously, I would say:

- Stay the course
- Make sure you have the ability to allow you to buy more equities if they happen to sink to rock bottom prices (no matter what anyone else says, I'd argue if equities are ever down 50%, it's prime time to market time and buy buy buy)
- Don't take on new debt that may be difficult to repay if economic conditions worsen
- Make yourself invaluable at your job so that you are less likely to be laid off should there be a recessionary period that affects employment
- If your emergency fund is lower than it ought to be, bring it up to snuff

All of the above is advice that's always applicable though, indicators of upcoming recession or not.
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Re: 10 Year/3 Month Treasuries Inversion

Post by pward »

I have a well diversified portfolio of equities, bonds, and gold. So it's just another day at the office. Equities are taking a beating (especially my small cap allocation), but my long treasuries are breaking out and gold is up as well, helping to pick up the slack. That's what a diversified portfolio does. Recession or not, I will make money.
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Re: 10 Year/3 Month Treasuries Inversion

Post by stocknoob4111 »

carol-brennan wrote: Fri Mar 22, 2019 9:40 am People who are buying bonds yielding less than 0 don't agree with you. Why do you think they're buying them? Because they like losing money?
Precisely, when there are huge flows into bonds yielding nothing all these people know something is up... the bond market is very prescient. However, hopefully the upcoming recession is mild and does not last too long but yes, open to all possibilities as one should be of course.
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Re: 10 Year/3 Month Treasuries Inversion

Post by corn18 »

We're too big to fail!
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Re: 10 Year/3 Month Treasuries Inversion

Post by michaeljmroger »

Doc wrote: Fri Mar 22, 2019 12:31 pm
What is a Recession
A recession is a significant decline in economic activity that goes on for more than a few months. It is visible in industrial production, employment, real income and wholesale-retail trade. The technical defintion (sic) of a recession is two consecutive quarters of negative economic growth as measured by a country's gross domestic product (GDP), although the National Bureau of Economic Research (NBER) does not necessarily need to see this occur to call a recession.
https://www.investopedia.com/terms/r/recession.asp

Nothing about stock markets at all.
That's what I thought, but then what causes today's 2% market drop and the general panic that comes with it? If a recession barely means lower returns for a fairly long time, is that a legitimate reason to get out of the market? :confused
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Re: 10 Year/3 Month Treasuries Inversion

Post by DonIce »

carol-brennan wrote: Fri Mar 22, 2019 2:37 pm The Fed is largely out of ammo. That's why Powell was desperately trying to raise rates. There's only so much QE one can do before it's no longer effective. Good luck, everyone. This time is different, in so many ways. Last time, we were lucky to have some smart folks able to bring us back from the brink. This time?
There's a full 2.5% of room to cut rates from here before they hit zero, which is quite substantial. Furthermore economic fundamentals are pretty strong right now. I suspect if we have a recession it will be a fairly mild one.
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Re: 10 Year/3 Month Treasuries Inversion

Post by bligh »

There is no guarantee of a recession.
The recession may not be a severe one.
The recession may not be a prolonged one.

But then again...

The recession may be the one to bring about the next dark ages.

All outcomes are possible. We are all just like John Snow. We know nothing.

I will stay the course and hope for the best but will get ready for a bumpy ride. :sharebeer
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Re: 10 Year/3 Month Treasuries Inversion

Post by DonIce »

bligh wrote: Fri Mar 22, 2019 3:36 pm The recession may be the one to bring about the next dark ages.
I'd be happy to take the bet that it won't. Of course, if I lost the bet, then probably you wouldn't have the means to collect anyway since the internet won't exist any more :D
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Re: 10 Year/3 Month Treasuries Inversion

Post by carol-brennan »

DonIce wrote: Fri Mar 22, 2019 3:40 pm
I'd be happy to take the bet that it won't. Of course, if I lost the bet, then probably you wouldn't have the means to collect anyway since the internet won't exist any more :D
This seems to be a common refrain here: if it melts down, there will be more things to worry about than your money.

There's a huge difference between being overexposed to equities and the end of the world. FYI.
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