Anthony Scaramucci on recession signal that bond market flashed
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On the New York Stock Exchange’s floor, traders are seen working on their trades on the 28 March 2022. This is in New York City. After a strong week of stocks, the Dow Industrial Average dropped more than 100 points during morning trading.
Spencer Platt | Getty Images
A key signal of recession flashed in the bond marketCNBC spoke to Anthony Scaramucci, SkyBridge Capital’s CEO, about his cautious approach when he predicted a downturn.
The U.S. Treasury yields on Monday were the 5-year Treasury yields and 30-year Treasury yields inverted for the first time since 2006. The yield spread between 2-year rates and 10-year rates was 2.25% on Tuesday. came close to inverting but stayed positive.
In the past, yield curve has inverted prior to recessions, indicating investors’ concern about the health of the economy.
Scaramucci, CNBC’s “So Historical It would Signal that We’re Heading Into a Recession 12 to 18 Months From Now” said Scaramucci.Capital Connection” Wednesday.
Bonds with longer maturities have higher yields than bonds that are shorter-term. Short-term yields tend to be lower when the bond market is healthy. Investors are more likely to expect higher returns if they lend their money over a longer period of time.
But when the opposite occurs — meaning an inverted yield curve — short-term bonds pay a higher yield than long-term ones. It is an indication that investors in bonds are concerned about the economic long-term prospects.
Scaramucci explained the reasons he would not be too quick to forecast a recession.
“You’ve got two conflicting things happening at the same time — the ending of the pandemic or at least the lockdown procedures in most of the world. The hedge fund founder stated that there is uncertainty regarding a ceasefire in Russia and Ukraine.
He added, “And I think it has to abate avant we can really analyze and look at the data and decide whether or not that’s consistent and the indications of recession.”
Scaramucci, however, said that he is “not completely convinced” that there will be a recession and that the economy “is booming all over the globe.”
He said, “So for me I want to remain cautious and I still have high hopes about the U.S. stock market and specifically the U.S. economic recovery.”
Is there more growth to come?
Inflation has been rising, which was aggravated by Russia-Ukraine’s war. This has led to increased market anxiety over the possibility of an economic slowdown.
Dow Jones reports that analysts expect Friday’s strong March Employment Report to reveal 460,000 additional jobs.
Last year, after suffering a 3.4% slump in 2020 from pandemics, the U.S. economic growth was at its highest level since 2010. fastest pace since 1984.
The CNBC Rapid Update — the average of 14 forecasts for the U.S. economy — shows U.S. growth accelerating to 3.5% in the second quarterThis is down from 1.9% for the first quarter. However, the second quarter estimate was down by 0.8 percentage points compared to the previous survey. This means that the economy still appears to be recovering from the omicron wave of 2022. However, inflation is increasing.
— CNBC’s Steve Liesman contributed to this report.
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