FKing Rothschild telling us or future… again
Weekly Economic Insights - 14 January 2019
Highlights of the week
Economist insights: In the US, the Federal Reserve said it is “listening” to markets; activity has slowed again in the eurozone
Focus Structural Analysis: Is an inversion of the yield curve an early indicator of recession?
The estimates of our econometric model indicate that the flattening of the yield curve does enable us to predict a near-term recession for the US, the UK and Germany
Based on these estimates, the probability of entering a recession in the next 12 months works out at 8.7% for the US, 3.5% for the UK, and 0.0% for Germany
However, the constraint of the ‘effective lower bounds’ of the key rates, and the implementation of QE could result in a bias in the estimation of the probability of recession
According to our analysis, this distortion is limited in the US and relatively limited in the UK, while we deem it to be substantial for Germany
https://www.edmond-de-rothschild.com/site/International/en/news/group/14113-weekly-economic-insights—14-january-2019