- The yield on the 10-year US Treasury note fell to its lowest level since last September.
- It’s a warning sign that storm clouds are looming over the US economy, says Jim Bianco.
- Fears of a recession are again in focus for investors, thanks to the recent banking turmoil and weak jobs data.
Wall Street analyst Jim Bianco says the bond market is showing a warning sign that the US economy is headed for a bad phase.
The yield on the 10-year US Treasury note has fallen to its lowest level since last September – and this suggests growing expectations of an economic recession, according to them. Bond yields such as a fall in market rates generally reflect the bet for an interest rate cut – a scenario that would be accompanied by a sharp decline in growth.
On Thursday, the rate on the 10-year Treasury loan fell to 3.27%.
“Rising or falling rates are neither bull nor bear for risk-on markets like stocks or credit. It depends on why they are rising or falling,” Bianco said Thursday. do,
“In this case, why are rates falling? Because the economy is doing well, and inflation is returning to its long-term rate of 2%? If so, it’s bullish for riskier assets. Or are rates falling because Are storm clouds gathering over concerns in the economy, banking industry? If that is the case, it is not bullish for risk assets,” he said.
“I’m in the Storm Cloud camp,” Bianco continued.
Bianco has previously looked to bond-market indicators to gauge the health of the US financial system. Recently, the founder of market research firm Bianco Research highlighted increased volatility in the bond market as a warning sign that trouble is brewing in the US banking sector – specifically that deposits after the Silicon Valley bank implosion Will continue, and will move forward. to a credit crunch.
Concerns about a possible US economic downturn, even a recession, have risen again after data this week suggested the labor market is finally weakening after a year of tightening monetary policy by the Federal Reserve. Is.
Source: markets.businessinsider.com
