I looked at a few feeds of x and looked at the short- and long-term interest rate difference charts.

I looked at a few feeds of x and looked at the short- and long-term interest rate difference charts.
Currently, it’s been almost 732 days since the short- and long-term interest rate gap reversed. We are the ones living in record time.

Blue is the T10Y2Y (short-term interest rate difference) curve. Orange is the IXIC (NASDAQ index) curve. There have been two failed attempts by T10Y2Y to reverse the short- and long-term interest rate difference, with an increase of -0.2 or more. (2022 is early in the reversal, so it is October 2023 and January 2024. In October 2023, as everyone knows, there was a bond problem caused by a sharp rise in US10Y (the second figure), and in January 2024, as bond yields stabilized, a decline in US02Y in particular proceeded (the third figure), showing the appearance of attempting to reverse T10Y2Y. Looking at it now, it seems like there is a shape of raising your head a little, but..

Long-term bond rates affect loans and short-term bond rates affect deposits. From the perspective of banks that do business with loan interest, the reversal of the short- and long-term interest rate gap is a reverse margin situation, which tightens loans, which plays a role in reducing liquidity. Therefore, the economic recession comes 1-2 years after the short- and long-term interest rate reversal because loans become difficult, money dries up, businesses endure, begin mass layoffs, and the recession begins, but there is a time gap.

It was the Biden administration’s funding that offset this. And when people were given low-quality jobs and put money in them, liquidity in the market was offset. So, the recession was coming, and it has not come until now. Of course, if you say this is the manipulation of Biden and Yellen, that’s right.

There is no other reason why I expect a rate cut in September. The difficulties of the real economy are now at some point. All of my savings from COVID-19 have been exhausted, I have to work, but good jobs are limited, and if you look at the Beveridge curve, the days when wages exploded due to lack of hands after COVID-19 have ended and normalized to before COVID-19. Since the unemployment rate is an indicator of a recession, it is too late to cut interest rates only after corporate earnings retreat and unemployment soar.

And the sahm rule (“average unemployment in the last three months – the lowest unemployment in the last 12 months” – signals that a recession in the U.S. is imminent when it is above 0.5p) is currently increasing by 0.43 (last figure). However, Claudia Sham said that even if this law is met, negative feedback (starting an increase in unemployment -> decreasing household income and consumption -> slowing down corporate profits -> starting an increase in unemployment -> starting an increase in unemployment -> … -> a feedback loop leading to a recession) does not occur.

This is where we need to see the earnings season and the July data. Is corporate profit slowing? Stock prices are likely to fluctuate due to the performance of several companies reflecting the real economy, but everyone knows that the economy is cooling off on one side of the polarized extreme. This year is also the year when the November election is at stake, so lowering the insurance rate is a good option. Of course, it will be useless if inflation does not subside, but so far, inflation is in control.

Organize:
There are moves to resolve the reversal of the short- and long-term interest rate gap, but it is still too much to say that it is a sign of an economic recession.
Rather, we expect an insurance rate cut in September.