Recession chances? One major Wall Street firm says only 15% “after better-than-expected jobs report.” (Reuters, Oct. 7) Yet, in EWI’s view, economic numbers are laggards and do not predict anything. Better to pay attention to this indicator from our October Financial Forecast:
The countdown to recession/depression is now “officially” underway. For the first time since July 5, 2022, the 2-year versus 10-year U.S. Treasury yield curve has “uninverted,” as shown on the chart below.
We covered the record-long yield curve inversion in May and August. We have previously noted that since the late 1980s, the yield curve will “uninvert” before the economy starts to contract. The record-long duration of the recent inversion fits EWFF’s forecast for a severe economic contraction this time. Since the stock market leads the economy, the progressing wave pattern of the major indices will be the best indicator of when the economic retrenchment begins. So far, stocks have not signaled an economic cliff-dive. The next time stock indexes drop 20%, a recession will be underway.
Just how close to the top of the cliff is the U.S. stock market? Get timely analysis from our Elliott Wave Financial Forecast and Elliott Wave Theorist at a special combo price.
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