Here’s What the ‘CRAZY INVERTED YIELD CURVE’ Means for You

The #TrumpRecession Label Is Going to Stick

Donald Trump has this week repeated his frequently made claim that the U.S. economy is strong, but chaos on the stock markets suggests some investors don't share his confidence.

Sliding bond yields and the inversion of a key part of the US yield curve on Wednesday for the first time in 12 years show that bond investors have a far gloomier outlook for the USA and global economies than the USA central bank.

Trump also continued his war of words with the Federal Reserve, accusing the central bank of being too slow to reduce interest rates, having previously increased rates "too much and too fast".

The European Central Bank had just ended its stimulative bond purchase program while the Fed was seen as likely to continue hiking rates after raising borrowing costs four times in 2018. Every country all over the world is cutting.

Their analysis highlighted "the impact of tariffs on supply chains, and the effects of uncertainty about these policies may have had in subduing capital spending".

A speech by Fed chair Jerome Powell next week in Wyoming, announced by the Fed on Thursday afternoon, could carry particular weight coming after a volatile period for global markets and signs the U.S.

That trend continued in July, the first month of the third quarter, as retail sales jumped 0.7 percent, far more than expected, driven by e-commerce and Amazon's 48-hour prime "day", according to new data from the Commerce Department. "Prices to us have not gone up, and in some cases, have come down", Trump said in a tweet. Consumers are in the best shape ever, plenty of cash.

"We're outside of the earnings season and markets are being batted around by news".

"The challenge is that Trump's trade policy has proven so erratic that you can not relieve the sense of uncertainty", as firms adjust to what may be a years-long rearrangement of global supply chains and cost structures, said Tim Duy, an economics professor at the University of Oregon. If this warning has weight, they will be gravely disappointed. The last inversion of this part of the yield curve came in December 2005, or two years before the Great Recession hit in 2008.

The president has steadily ratcheted up pressure on China to make a trade deal with ever-higher tariffs on Chinese imported goods.

By December 15 all goods imported from China will face stiff United States tariffs, and markets are watching anxiously for signs of progress in the dispute.

"We will Win!" Trump tweeted.

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