RECESSION WATCH -- A short 🧵--
1) 10Yr/2Yr UST spread been inverted since 7 July '22 -
Persistent inversion has always led to recession...
2) 40% of US banks have tightened lending standards -
This has always been followed by recession and current reading implies 7%+ corporate high yield default rate by year-end...
3) YoY change in US LEIs is deeply negative -
Prior cycles suggest we are a month away from the onset of recession...
4) ISM PMI reading is recessionary -
Prior cycles suggest we are less than two months away from the onset of recession...
5) ISM New Orders in recessionary territory -
Prior cycles suggest we are less than two months away from the onset of recession...
6) The US jobs market is the last man standing but cracks are emerging (in % of states with rising unemployment).
On watch for the unemployment rate to tick higher and when it crosses above its 12-month moving average, it should coincide with the onset of recession.
- END -
P.S - These macro indicators do work
In late 2019, similar indicators were forecasting a recession in spring 2020...
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