The recession and inversion of the main themes today
All the news feeds today are full of two words: inversion and recession. If the latter is more or less clear, traders have come on the market in the last 10 years, may not know that such an inversion of the yield curve.
We are talking about a situation where the yield on long-term US bonds (in our case 10 years) and yield of short-term (2-year) are arranged in such a way that investing in a short paper, it becomes more profitable. Yesterday, the yield on 10-year securities dropped to the level of 1,619%, while 2-year-old rose to 1,628%.
It may seem that the difference in 0,009% were not significant, but important trend, and just a few scares investors. Many publications write that the seven last global crisis began with inversions, but they’re silent, that not every inversion led to the crisis. The reasons for recession in the world now more than enough – from trade wars to protest in Singapore. Therefore, the inversion may not be the reason for the recession and its consequence.
Despite yesterday’s panic, today markets are trying to regain part of the losses. Mosberg index, which yesterday lost 1.3 percent, already added 0,41%. Futures for U.S. stocks, which fell by 3%, returns itself +0,7%.
Is it possible to say that investors have calmed down? Definitely not. In such circumstances, we must look at the paper protective sectors. Gold mining companies such as Barrick Gold (GOLD) and Polyus (PLZL) may show significant revenue growth due to the increase in gold prices. Traditional paper Coca-Cola (KO) and PepsiCo (PEP) also can balance the portfolio.
In Russia today published financial results according to IFRS for the first half of the company “Mechel” and X5 Retail Group will report on progress in the second quarter of 2019.
“International financial center”