Newell Palmer: Monthly Economic Notes – April 2019
There are many ways to define an inverted yield curve, but one measure inverted in late March 2019, when you can earn more by buying a 3-month US Treasury note than a 10-year one. This economic gauge has recently received wide attention because an inverted yield curve has occurred prior to each of the last five US recessions. The last time the curve inverted was in early 2006 in the lead-up to the onset of recession late the next year.
Newell Palmer: Monthly Economic Notes – March 2019
In January, the US Federal Reserve put on hold its previously flagged program of interest rate rises and quantitative tightening. The European Central Bank has laid the groundwork for doing the same. The RBA has similarly signalled the possibility of interest rate cuts. The markets liked it and equity markets have rallied since January. The standard narrative is that having dealt with the GFC, central banks are trying to stimulate growth via low rates while flooding the interbank market with liquidity. This will force greater investment in risky assets, reflating the economy. Normalisation will proceed once this is achieved.
Newell Palmer: Monthly Economic Notes – February 2019
Last year, there was a notable increase in market volatility and a decline in global economic growth from its previous high in the first part of 2018. The increase in volatility was the result of a number of factors including:
increased geopolitical tensions, primarily in the form of protectionist measures by the US with its key economic partners China and Europe,
a normalisation of interest rates in the US,
tightening of liquidity