I have no idea.
The Canada 5-year yield dropped from 1996 through 2020. It got down to around zero, and has climbed since, closing Friday at 4.25% Here’s the long term view:
And here’s the short-term view:
Over the last week, the yield has been flat. It “double topped” at 4.78% on Thursday, and then dropped.
So here’s the question:
Is it now obvious to everyone that we are in a recession?
Is it now obvious that inflation has peaked, and will turn lower?
If so, interest rates have peaked, or are close to it. If not, more pain is to come.
And yes, I know, the price of oil is high, but it’s not that high.
Oil “double topped” at around $93.50 in October and November of last year, bottomed around $67, and has headed back to that previous resistance of around $93. It closed the week at under $91.
If we are in a recession, we ship less stuff, so we consume less oil. And again, yes, I understand: if geopolitical instability impact production, that increases prices. If the winter is cold that impacts prices (but of natural gas more than oil). There are many factors to consider.
My guess is that we are close to the end of the hiking cycle, so I have begun, slowly, to increase my exposure to bonds. They are so beaten down that they likely don’t have farther to go.
Or not. We shall see. I’ll report back next week.
Have Yields Topped?
by JDH on September 30, 2023
I have no idea.
The Canada 5-year yield dropped from 1996 through 2020. It got down to around zero, and has climbed since, closing Friday at 4.25% Here’s the long term view:
And here’s the short-term view:
Over the last week, the yield has been flat. It “double topped” at 4.78% on Thursday, and then dropped.
So here’s the question:
Is it now obvious to everyone that we are in a recession?
Is it now obvious that inflation has peaked, and will turn lower?
If so, interest rates have peaked, or are close to it. If not, more pain is to come.
And yes, I know, the price of oil is high, but it’s not that high.
Oil “double topped” at around $93.50 in October and November of last year, bottomed around $67, and has headed back to that previous resistance of around $93. It closed the week at under $91.
If we are in a recession, we ship less stuff, so we consume less oil. And again, yes, I understand: if geopolitical instability impact production, that increases prices. If the winter is cold that impacts prices (but of natural gas more than oil). There are many factors to consider.
My guess is that we are close to the end of the hiking cycle, so I have begun, slowly, to increase my exposure to bonds. They are so beaten down that they likely don’t have farther to go.
Or not. We shall see. I’ll report back next week.