Recession is here and major liquidity squeeze on-going. US Treasuries expect a Fed pivot and either deep US recession or shortage of collateral. Neither look great for stock markets

Ex-Fed insider: A full-blown recession is almost certainly coming

New York (CNN Business)The Federal Reserve’s war on inflation will eventually kill the economic recovery from Covid-19, former Fed official Bill Dudley warns.

The problem is that the Fed began its quest to tame inflation late, leaving the central bank little choice other than to slam the brakes on the economy by drastically raising interest rates.
“Almost certainly there will be a full-blown recession. If we’re not in one yet, I think we will be in the next 12 months,” Dudley, the former president of the New York Federal Reserve, told CNN in a phone interview.

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ZeroHedge – On a long enough timeline, the survival rate for everyone drops to zero

US Treasury Yield Curve Inverts Further To -37.6, Most Inverted Since 2000

And the “sizzling” jobs report isn’t feeling any love in the bond market where the US Treasury yield curve (10Y-2Y) deepened its inversion to -37.593 basis points, a drop of -1.331 BPS. Note that the 10Y-2Y curve falls below 0% just prior to every recession.

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Summers Warns of ‘Economic Distress’ As Fed’s Powell Holds Out Hope

Some economists — including former Treasury Secretary Larry Summers — say Powell is being much too optimistic about the Fed’s ability to tame prices without pushing unemployment much higher. The implication: The Fed chief, who has sought to elevate the central bank’s focus on boosting the labor market, may be forced to accept millions of job losses and a significant recession to curb inflation.


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