The S&P 500 has declined an average 32% in more traditional recessions, and in this cycle it has been down nearly 20%.
If the 2-year were to move above the 10-year yield, the curve would be inverted, which is a recession signal.Ĭalvasina said the stock market, for now, is pricing in only a shallow recession. On Friday, the 2-year Treasury yield reached 3.06%, and the spread was only 10 basis points. That means shorter duration yields, like the 2-year, rose closer to longer duration yields, like the 10-year. In the bond market, Treasury yields rose after the hotter inflation report but the yield curve also flattened. There are just a handful of corporate earnings, including Oracle on Monday. I would like to hear more commentary around that flexibility."īesides the Fed, there are a few important economic reports on the calendar next week, including the producer price index on Tuesday retail sales Wednesday housing starts Thursday, and industrial production Friday. "It reflects that they don't want to do too much damage to the economy. It shows they're not on autopilot," she said. She said she was encouraged that some Fed officials seem ready to raise rates more rapidly earlier in the year, and leave themselves flexibility later on.
RBC's Calvasina said she is waiting for Powell's comments, and does not expect any surprises from the meeting. With little apparent appetite for an upside surprise, the course seems set for a 50bp hike next week," the JP Morgan economists noted. "Chair Powell indicated a desire to guide expectations rather than surprise expectations. Personal Loans for 670 Credit Score or Lower Personal Loans for 580 Credit Score or Lower Best Debt Consolidation Loans for Bad Credit
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