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THIS TIME IS DIFFERENT

Yield curve inversion = Imminent recession?

Since 1960, every recession was preceded by an inversion, but not every inversion led to a recession

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Since equity markets have a tendency to anticipate and discount future events, equity bear markets always start well before a recession. This happens because economic recessions are based on GDP data, which is backward looking.

BEARS love indicators to justify their gloomy outlook. The aptly named "Death Cross" is one of the favourites of technical analysts, while an inversion of the yield curve is a favourite of fundamental analysts and economists.

The yield curve is simply the yields for different maturities,...

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