Best investment strategy is risk off now? Fed overnight interest rate is higher than 10 year T-bill interest rate - November 14, 2022

[sharon sanders]

What is going on with the US economy?


10 year Treasury rate is 3.88% today. https://ycharts.com/indicators/10_ye...20of%204.26%25.

Fed overnight rate for a risk free deposit by a bank is 3.90%
https://fred.stlouisfed.org/series/IORB

This is very unusual. Usually interest rates increase as the time horizon increases. For example, the 30 year mortgage rate is about 7.0%. A new car loan (4-5 years) is about 4%.

 

[Emily]

I've read that an inverted yield curve is a coming recession indicator, especially if it last for awhile. It doesn't seem to be able to predict how deep a recession is coming.

https://www.investopedia.com/articles/pf/09/avoid-five-recession-risks.asp
5 Things You Shouldn't Do During a Recession

ByThe Investopedia Team

Updated July 12, 2022

Reviewed by Somer Anderson

Fact checked byTimothy Li

In a sluggish economy or an outright recession, it is best to watch your spending and not take undue risks that could put your financial goals in jeopardy. A recession can impair your personal finances. Being prepared and taking a few simple steps to reduce your risks can help you weather the economic storm. Below are some of the financial risks everyone should avoid taking during a recession...

 

[sharon sanders]

The inverted yield curve analysis usually applies to the 3 month treasury bill vs. the 10 year treasury bill. Right now the 3 month is at 4.09% and the 10 year is 3.88%. This is telling us that the market forces that bid on the treasuries bills (i.e. set the rates defacto) think that the short term risk (3 months) is higher than the long term risk (10 years). This is unusual. This suggests market forces expect an imminent economic upset.

What is extra remarkable is that the overnight rate is above the 10 year rate. The overnight rate, which is risk free, is usually very low compared to other interest rates. It is a no risk guaranteed return.

 

[Emily]

https://asiatimes.com/2022/11/the-financial-reset-is-near/
OpinionThe financial reset is near

The world is drowning in a sea of debt

by Jan Krikke November 14, 2022

“We are in a world of irredeemable paper money – a state of affairs unprecedented in history.” – John Exter (1910-2006), economist and central banker

Central banks around the world have been on a gold-buying spree. Gold purchases this year have reached 673 metric tons, more than the total amount purchased in any full year since 1967. Until recently, much of the financial world regarded gold as a ‘barbaric relic” of the past.

Why the renewed interest in gold? The short answer is that the world is drowning in a sea of debt that has passed the US$300 trillion mark. Independent macroeconomists like Luke Gromen and Brent Johnson believe global debt has reached critical levels and they predict a costly and very painful financial reset.

The Exter Pyramid, named after its inventor John Exter, makes clear that global debt touches everyone. It includes pensions, social security, stocks, bank deposits, and the very solvency of nations. Governments have used their central banks to bring us to what could become the Mother of all Monetary Meltdowns....