The US yield curve fell closer to inversion yesterday despite the stock market rally following news of a trade war truce between Donald Trump and China.
Take a look at the chart.
An interest rate hike is still coming in December, but the last two times the Fed stopped raising rates and began to lower them were not good times for people fully invested in the US stock market. An inverted yield curve is the most accurate indicator of a coming recession in 6-12 months that there is. The good news is it isn’t inverted yet….the bad news is that stock market bulls who believe that a Fed no longer raising rates means stocks will go up are wrong and mistaken.
Stock market futures are gapping down this morning a bit as people see this yield curve, but the market is still likely to hold last week’s gains for the next few weeks.
Gold is rising and testing the $1,240 resistance area this morning. Gold has outperformed the stock market since October the 1st and is likely to do so now going forward.