Martin Lewis gives warning of ‘worldwide recession’ – US makes ‘bad news’ signal for Bonds

GMB: Martin Lewis warns of ‘world-wide recession’

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The Money Saving Expert Martin Lewis explained a long-term prediction of the spread in the US could potentially lead to a recession. The difference between two and 10-year Treasury yields seems well on the way to turning negative for the first time since 2019 as well, narrowing below 6 bps on Tuesday. This is the so-called curve inversion that is considered a reliable predictor of recession, although the US Federal Reserve has urged investors to also watch other curve segments which are still steep, giving it room to tighten policy further and faster.

Speaking on ITV’s Good Morning Britain, Mr Lewis said: “The markets are looking at, the markets are currently 0.75 percent by the end of this year they’re looking at about 1.5 percent for UK-based rates, maybe up to 2 percent.

“After that, it’s very difficult.

“There’s a thing going on in America at the moment called 10/2 which means the US bond rates for two years, interest rates are more expensive than for 10 years.

“There’s this long-term prediction of low-interest rates and in the short-term interest rates are likely to go up but cut back down again and that actually is a prediction that potentially there might be a worldwide recession again.

“It’s now the best news that, I’m afraid but interest rates in the short-term are likely to go up to about 1.5 percent this year but nobody really knows.”

More to follow…

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