Macroeconomist Henrik Zeberg has issued a stark warning: the United States may face a severe recession within the next two years. Using historical data and market indicators, Zeberg predicts that this downturn could be the worst since the Great Depression of 1929.
Terrifying, right? Here’s all the information you need to know.
In a recent post on the X platform, Zeberg highlighted a key chart from Piper Sandler’s Recession Indicator. This chart compares two-year Treasury yields with the Federal Funds Rate, showing trends where shifts in market yields often preceded actions by the Federal Reserve and signaled economic declines. Currently, inflation is at 3.4%, a level reminiscent of past economic troubles.
The chart also emphasizes the Relative Strength Index (RSI), which measures momentum in price movements. Historically, significant bearish patterns in the RSI have foreshadowed major market crashes. The current ‘Mega Bearish Structure’ suggests a similar impending decline, raising serious concerns about future economic stability.
Speculation about a potential recession has intensified as various economic indicators flash warning signs. Declining Treasury yields typically increase investor demand for safe-haven assets amid economic uncertainty, reflecting growing concerns about a looming market downturn.
There is speculation about a potential blow-off top in US equities and cryptocurrencies, indicating an unsustainable surge in asset prices before a sharp decline. This scenario usually involves rapid price increases driven by speculative buying, often leading to significant market corrections.
An Anxious Market
Investment research platform Game of Trades has highlighted the predictive ability of the 10-year/3-month US Treasury curve, forecasting a likely recession in the latter half of 2024. As large-cap companies lead the recent market rally and the cryptocurrency market consolidates, worries about the timing and impact of a potential recession continue to grow.
Also Read: Ripple vs SEC: What to Expect Next in the Ongoing Legal Battle
Do you think the experts are overreacting, or is a storm brewing? Let us know your take.
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