- Wealth PMS
Brazil’s and India’s government yield curves are inverting, a condition in which short-term rates rise above longer yields. Historically, such an inversion almost invariably precedes a recession, as investors temporarily accept lower long rates in anticipation of the decline in yields that typically accompanies an economic downturn.
(HT: Deepak Singh)
At this point the 10 year bond is at 8.26% and the 182 day T-Bill went yesterday at 8.22%. The five year bond is at 8.34%. In a way, the curve is already inverted here.
Yield curve inversion has seen worse time, like I’ve mentioned in an earlier post (Inverted Yield Curves=Slowdown):
The last time curves got close to inversion, markets went up like crazy first and then reversed. When it finally inverted (July to Oct 2008) interest rates were high – repo rate was 9%. The new chart
It just gets worse!
Btw, in that article – Brazilian interest rates are 12.25%. Remember that when they try to tell you we’ll “probably only go up to 8%“.