Podcast: Yield Curve to the World

Please listen to our weekly podcast summarizing our August 17th note and consider becoming a paid subscriber, if you are not already, to read the full report. If you are a recent free subscriber and would like a 30 day trial, please email me at [email protected] The August tariff tweet correction morphed into yet another recession scare due to a convexity exacerbated rally in global government bonds. We do not believe the risk of a US recession has risen appreciably in recent weeks despite our concern about the effect of the Trump Trade War on business confidence. We do believe that the inversion of the 2s10s Treasury curve does signal a growing risk of the disruption in global trade deteriorating into a protracted contraction that could spread beyond the export sectors in China, Japan, Germany, South Korea and the rest of the mercantilist world. While the US will no doubt be negatively effected through weaker corporate profits, business confidence and exchange rates, we do not believe the effect will be as large as the 2014-2016 Chinese heavy industry hard landing and related collapse in energy prices and resultant earnings recession. Despite our confidence in the ability of the US economy to withstand a protracted global trade contraction, we do not believe the risk-off episode we called for in our August 2 note¹ is complete from either a price (minimum 10% S&P 500 decline) or time objective (at least one month).¹https://ironsidesmacro.substack.com/p/tipping-point-time-to-cut-riskIn this week’s note…* No Checks and Unbalanced: The latest public policy shock* Inversion: The Global Trade Recession* Back in the USA: Consumption and Productivity* Banks & Yield Curve PanicBarry C. KnappManaging PartnerIronsides Macroeconomics LLChttps://ironsidesmacro.substack.com908-821-7584https://www.linkedin.com/in/barry-c-knapp/@barryknappThis institutional communication has been prepared by Ironsides Macroeconomics LLC (“Ironsides Macroeconomics”) for your informational purposes only. 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