CME Fedwatch has 48% Chance of at Least Four Hikes in 2018. Inversion When?

Deutsche Bank research suggests the yield curve will invert in 2019. I suggest sooner if the Fed hikes 4 times.

The inversion chart came in a Tweet. I do not have a link to the analysis.

If the Fed gets in 4 hikes this year, I would expect the curver to invert sooner. CME Fedwatch shows a nearly 50% chance of at least four hikes.

It's also possible the economy falls to pieces and the next move is a cut. Under that scenario, inversion may be a long time coming.

Mike "Mish" Shedlock

Comments (25)
No. 1-25
AWC
AWC

In this new Centrally Planned system, does an inverted yield curve positively spell recession? And if it does, why would the Fed intentionally induce recession? Other than to allow it's benefactors to sell at the top and buy back at recessionary lows? The Fed is, after all, a political entity, and politics being what it is, well,,,

Blacklisted
Blacklisted

THE REASON THE FED IS RAISING RATES IS TO POSTPONE THE PENSION CRISIS. When the sovereign debt contagion starts to spread, which will be obvious with another 1% rise in rates, not to mention the impact of a rising dollar on foreign balance sheets, who would want to own long-term govt paper? When this happens in the next 1-2 years, LT rates will rise much faster than ST.

PodUK
PodUK

The Fed might want to cause a recession in 2019/2020 so as to lower probability of Trump's reelection. For progressives the ends justify the means.

abend237-04
abend237-04

The Fed is desperate to reload. It can't sell, nor will the public accept, negative interest rates after a decade of plundering the savers to restore the TBTFs.