Rapidly rising interest rates hold enormous explosive power for the US economy!
Every inversion in the US yield curve since World War II has been followed by a recession. Both are currently happening at the same time. As a result, the monetary policy role of the US Federal Reserve is increasingly backward and interest rates are falling again – that too for fiscal policy reasons. This opens up an interesting outlook for asset prices and the US dollar for the winter half year following the autumn turbulence.
Extreme distortions in US interest rates
The government bond market in the United States is in a state of emergency: interest rates on short-term debt securities are significantly higher than those on long-maturity securities. There is also a situation in which key interest rates, that is, short-term refinancing rates for commercial banks at the US Federal Reserve (Fed), could exceed yields on 10-year US government…
