Tag Archives: USA

An Inverted Yield Curve Did Not Always Precede Recessions

I made a post before how an inversion of the yield curve has preceded the last 8 recessions in the US. Recently, I came across this interesting chart on Twitter which shows the yield curve spread for US treasuries with a maturity of 3 month and 10 year from the last 100 years.

This chart shows that yield curve inversions didn’t happen between the 1930’s and 1960’s before a recession happend.

Long Term Yield Curve Inversion Chart
Long Term Yield Curve Inversion Chart

Currently the US 3 month – 10 year yield curve is inverted.

Yield Curve Inversion 3 month - 10 year spread
Yield Curve Inversion 3 month – 10 year spread

Global PMI’s Are Rising Again After A Long Negative Streak

Purchasing Managers’ Indexes (PMI) are economic indicators derived from monthly surveys of private sector companies. Today the latest PMI Manufacturing Index for the US (The ISM Manufacturing Index) came out which was the most negative reading in the last decade.

Global manufacturing PMI’s are rising again though after a record streak of 15 negative months of declines. The last time this index went positive after a long streak of negative PMI’s it was 2009 and that turned out to to be the bottom and a great moment to buy stocks.

Global Manufacturing PMI
Number of months in a row of rising or falling Global Manufacturing PMI’s

The above index has coincided quite nicely with the Bloomberg World Stock Market Cap index which hit a high in January 2018. The index still hasn’t recovered since then.

Bloomberg World Stock Market Cap Index
Bloomberg World Stock Market Cap Index

US debt to GDP and household debt service ratio

A few days ago I made a post about European debt to GDP ratio’s and how they did not show any signs of excess. Hereby are the same charts but this time for the USA. The first chart is a long term chart which shows the debt to GDP ratio for US non-financial corporations, the US government and US households from 1975 till 2019. As can be seen households have been deleveraging since the start of the Financial Crisis in 2008 while corporations and the US government have been steadily getting more in to debt.

US debt to GDP ratios for US non-financial corporations, the US government and US households from 1975 till 2019
US debt to GDP ratios for US non-financial corporations, the US government and US households from 1975 till 2019

Thanks to low rates and the above mentioned deleveraging of households debt service ratios for US households are the lowest in 40 years.

US household debt service ratio (Debt payments as % of disposable personal income)
US household debt service ratio (Debt payments as % of disposable personal income)

Via Guide to the Markets – United States