On Wednesday, the Dow Jones Industrial Average plunged 800 points — its worst day of 2019.
That’s because investors are running scared after the yield curve inverted for the first time since 2007.
Inversion means the yield on the U.S. 10-year Treasury dipped below the yield on the two-year Treasury.
In other words, because of the trade war and other concerns, there’s a lot of uncertainty about the U.S. economy right now.
And it gets worse: A yield curve inversion has preceded each of the past seven recessions.
That means investors need to plan now for potential market chaos in the months ahead. So, I asked experts Michael Carr and Ted Bauman to help our Sovereign Investor Daily subscribers know what to expect.
In today’s Market Insights, they discuss:
- The inverted yield curve is a major warning sign for the economy. Quote: “Business owners are nervous about the short term. They’re not willing to borrow to build up inventory because they’re worried about the next year. And as they do that, we’re seeing rates go crazy across the board.”
- Brexit is poised to destabilize global trade even further. Quote: “It’s like that train tunnel. You see the light coming at you. We know it’s going to hit October 31. And I don’t believe Boris Johnson is going to blink.”
- Uncertainty over economic growth in the U.S. and elsewhere will cause short-term market panics. Quote: “Whether the yield curve predicts another recession, as it has the last seven times, is hard to say. But if it does, I think it will come quicker than it usually does.”
Check out the 11-minute video below to hear Mike and Ted’s thoughts on what the inverted yield curve means for your investments:
Our experts will have many more articles and videos to help you navigate the changing global economy. To make sure you never miss an edition of Market Insights, subscribe to the Sovereign Investor Daily YouTube channel by clicking the red subscribe button.
And remember to read below for a wrap-up of this week’s Sovereign Investor Daily articles.
Assistant Managing Editor, Banyan Hill Publishing