A repeat of 2008 is on the horizon. On July 5, 2022, the yield curve between the two-year and ten-year Treasury notes inverted, and it's stayed that way since then. The feds interest rate hike started on March 17, 2022 and was paused on July 26, 2023. I suspect the unemployment rate will rise on Q4 2023 or possibly Q1 2024. After that event happens, the feds will start dropping the interest rate. The rate drop will start the clock on the next financial crash.
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@2rca+1q2fKCl6
The crash ALWAYS happens after the yield curves go back over 0.0. ALWAYS.
One other thing. Take a look at the Reverse Repo chart. Expect something BIG to happen around March 2024. Think 9/11, another fake virus, etc.
https://fred.stlouisfed.org/series/RRPONTSYD
Two main risks to the financial sector for 2024 is the Fed and Office Properties. Inverted yield curve is a distant third. If there is some type of liquidity event while these rates are so high, the $683 BILLION of unrealized losses in the banking system could become realized. These losses are directly tied to the Fed rate. The higher the interest rates, the lower the value of the previously purchased t’bills and fixed-rate securities. Lower the interest rate, and the value starts to come back up.
The second is office loans. Yes lots of risk there and losses will be impressive and last for years, but CRE includes many other forms of property types that could help dilute the hits to portfolio lenders. But make no mistake, there is a problem, and hopefully not one that triggers that liquidity event.
Inverted yield curve does not cause bank crashes. It's happened repeatedly throughout history. It just grabs headlines because it sounds catastrophic. (ok, it's not good, but it is hardly the End of the World.)
You want your next crisis? Look to Commercial Real Estate.
Private Equity and Real Estate firms who are sitting on massive (often leveraged) loans to buy buildings that now sit empty with tenants unable to pay the leases that the PE and CRE firms count on to pay down their bank loans.
THAT'S why all the banks want us back in the office!
Sounds about right.
Golden parachutes need to be eliminated along with bonuses
Oprah: You get a package! You get a package! You get a package!
Agreed. The finance sector is about to go through a complete overhaul starting in 2024. It's out of our hands, the writing has been on the wall. Consumerism in the US really needs a pause anyway. There is so much waste at home and at work.
We have shopped our way out of a recession but the crash is coming
I think we should save our money for at least the remainder of 2023 and through Q3 2024. We have to stop rewarding greedy corporations that mistreat employees and overcompensate the top "executives"