Recession Around The Corner? Evidence From Treasury Market And S&P 500 Earnings Sentiment

It has been the longest bull market in modern history, enabled by massive Central Bank intervention. But with trade wars raging, Brexit, Presidential impeachment over something, etc., there remains a significant risk of a recession over the next 12 months.

clear

If we look at the normalized change in the 10Y-3M curve minus normalized change in 10Y yields, we can see a heightened recession risk.

recessyikes

Lower yields and steeper curves are not a good recipe.

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And then we have the decline in S&P 500 earnings estimates.

Screen Shot 2019-12-03 at 9.31.15 AM

Recession coming?

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