Larry Swedroe: Inaccurate Indicator

Ted

FYI: On Dec. 3, 2018, the yield curve inverted, with the yield of 2.83% on the five-year Treasury note falling to 1 basis point lower than the yield of 2.84% on the three-year Treasury note. Perhaps that “dreaded” event contributed to the Dow Jones industrial average’s 795 point fall that day.

However, other issues worrying investors also likely contributed to the index’s steep drop: fears of a trade war given that hardliner Robert Lighthizer will lead negotiations with China instead of Steven Mnuchin; the potential for rising interest rates to slow auto and home sales; uncertainty about tax and regulatory policy with Democrats retaking the U.S. House; and even geopolitical risks related to Russian aggression in Ukraine.
Regards,
Ted
https://www.etf.com/sections/index-investor-corner/swedroe-inaccurate-indicator

jerry

I am puzzled by the article since it got into detail about inversion between 2 and 5 years (which I believe recently happened) but I thought the prediction of recession was an inversion for the two and 10 year bonds. It also suggested you could not use to market time while indicating that it might bea good idea to sell one year after the inversion.(one year result better than 3 year)
Maybe someone wiser than I can explain.