The 10-year TIPS yield has fallen to a record low of 0% (the 5-year TIPS is -0.8%). This is the market-based real rate for the next 10 years, and it is telling you that the bond market is pricing in a decade of no economic growth in the U.S...when bond yields are sliding to new lows as they have been when financial stocks are doing likewise, it is a classic sign of credit contraction. That is very deflationary...
Update (Rosie): We summed up the University of Michigan consumer sentiment index with the Philly Fed business sentiment index to get a complete picture of economic confidence from households and companies... Note that this metric has a 100% track record in predicting recessions.
Post a Comment