Recessions and the Flight to Saftey
Even though the great recession was ongoing for almost a year prior to being dated by the NBER, it was the announcement itself that started the massive migration from stocks to bonds. The purple square encapsulates this time range. It is best to enter this position before an announcement, which some market participants did.
At the current growth rate, we will be in a recession anywhere around October - January, after mass layoffs result in unemployment across the economy. The NBER has responded more quickly in dating the more recent COVID-19 2020 recession, which lasted only a few months and announced around four months after it started.
At the current growth rate, we will be in a recession anywhere around October - January, after mass layoffs result in unemployment across the economy. The NBER has responded more quickly in dating the more recent COVID-19 2020 recession, which lasted only a few months and announced around four months after it started.
Comment:
The SPY drop started before bonds took flight, beginning at the point of where the backdated recession began. It dropped around 15% prior to announcement. Today's market conditions are a lot worse, and the timeframes will most likely be compressed and shorter in duration with higher downside magnitude.
Comment:
The short interest on TLT is currently around its daily trading volume. If this persists there will be significant backpressure on TLT as shorts buy it to cover their positions.