Puzzle Pieces for an Economic Downshift Are Falling Into Place

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(Bloomberg) --

Chaos in Hong Kong. A cross-asset market shock in Argentina. And that dreaded yield-curve inversion—a fleeting drop in 10-year U.S yields below 2-year rates—goes viral by creating panic-selling in the stock market. It was quite a week. JPMorgan Chase & Co. Global Markets Strategist Gabriela Santos joins the “What Goes Up” podcast to make sense of it all. 

“We tend to look at the yield curve not as a crystal ball on its own, but really a piece of a much broader puzzle,’’ Santos says. “We look at a whole variety of other indicators. which will include market as well as economic data. And I think really the inversion of the yield curve, after a really long process of flattening, confirms a few things we’ve already known: We’re late cycle and we’re clearly in the midst of a downshift in the pace of global and U.S. growth.  That’s led us to advise clients to become a bit more defensive.’’

Also joining hosts Sarah Ponczek and Mike Regan is Bloomberg cross-asset reporter Luke Kawa, who gives his take on the market volatility of August.

©2019 Bloomberg L.P.

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