Americans are continuing to struggle with rising inflation. On Tuesday, the spread between the 2-year Treasury yields and the 10-year Treasury yields was inverted. This indicates that the U.S. may soon be facing a recession. This week, a myriad of financial reports have noted that the U.S. dollar’s reserve currency status could be undermined. Moreover, there’s also the possibility of crude oil prices reaching upwards of $250 per barrel, according to a top hedge fund manager.
Ominous Inverted Yield Curve Sends Recession Signals, While the Dollar’s Reserve Currency Status Is Questioned
A closely watched indicator in the bond markets flashed on March 29 a signal which usually signals that the U.S. is headed for recession. This signal was generated in Treasury bond markets when the spread between 10-year Treasury notes and 2-year Treasury bonds inverted for their first time since 2019. On Wednesday, Treasury bond markets saw the spread between 2-year and 10-year Treasury notes invert for the first time since 2019.
This inversion occurred while U.S. inflation is high and Federal Reserve plans to tighten monetary policy and increase benchmark bank rates. There’s also been a number of reports in recent times that question whether or not the U.S. dollar could lose the fiat currency’s reserve currency status. The Economist asks: “Will dollar dominance give way to a multipolar system of currencies?” in a recent report, and the financial authors at Barron’s and South China Morning Post (SCMP) ask the same question or claim de-dollarization will fail.
Top Trend Forecaster Says as Long as War Ensues ‘the Odds of a Global Recession Increase’ — Crude Oil Could Skyrocket as High as $250 per Barrel
Gerald Celente, a trend forecaster and publisher of the Trends Journal, doesn’t have a bright outlook on the economy and recently said we’ve progressed from the “Covid War to World War III.”
From COVID WAR to World War III
— Gerald Celente (@geraldcelente) March 31, 2022
“[The Covid] War has taken a toll on the global economy that is not being recognized nor reported,” Celente tweetedOn Thursday. “And while the ‘Bigs’ have gotten bigger with merger and acquisitions and stock buy-backs at all-time highs, on Main Street, increasing economic hardship prevails… and will worsen,” he added. Celente also added:
The odds of a global recession increasing as long as there is a Ukraine War and Russia sanctions are in effect, as detailed in our last two Trends Journal editions.
Celente’s recent Trends in the News blog post on substack.com highlights how some executives are predicting oil prices to rise as high as $250 per barrel. The trend forecaster quoted Pierre Andurand’s recent quote when the hedge fund manager at Andurand Capital Management said it’s possible crude oil prices per barrel could hit $250 this year. Celente’s research delves down into more experts who believe crude oil prices per barrel could skyrocket. Celente also quotes Trafigura trader Ben Luckock that said oil could surpass $150 this summer.
Currency Analyst: ‘One of These Stories Is Wrong’
With inflation rising fast in the U.S. and this week’s Treasury notes inversion, on Thursday all major stock indexes like the Dow Jones, S&P 500, Nasdaq, and NYSE closed the day in red. Reports also indicate that “Bond investors appear far more pessimistic on the economy.” Furthermore, the inverted yield curve has predicted a looming recession every time for the past 60 years, according to research published by the Federal Reserve Bank of San Francisco. Divergent signals are still confusing investors, and something has to go sooner or later.
“Rates markets are very consistent in telling a story where the Fed is going to do some damage to the economy,” Edward Al Hussainy, senior interest rate and currency analyst at Columbia Threadneedle told Reuters on Thursday. “[Meanwhile,]The risk market has not done an excellent job pricing potential damage to growth prospects. One of these stories is wrong,” the analyst added.
How do you feel about this week’s inverted yield curve and the potential for crude oil to reach $250 per barrel? Comment below and let us know how you feel about the subject.
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