Article preview: Market commentators were quick to link an inverted yield curve in the US towards the end of last year to a sharp equity market correction. The inverted yield curve – which describes an interest rate environment where long-term debt instruments attract a lower yield than short-term debt instruments of the same credit quality – is viewed as a strong predictor of looming economic recession. In fact, each of the past seven economic recessions in the US were preceded by an inverted yield curve. Despite the strong link between inverted yield curve and economic recession, there’s no reason to believe a recession will arrive immediately.
Are global recession fears premature?
This 712 word blog post considers the factors behind current equity market volatility and the latest outlook from Trevor Greetham at Royal London Asset Management, which concludes fears of a global recession are premature. Written on 12th January 2019.
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