Delivering Global Macro Investment Insights

DeSaque Macro Research

DeSaque Macro Research Limited was formed by Said DeSaque in April 2012 with the view to delivering global macro investment insights aimed at providing new ideas to clients.

Said DeSaque has over 26 years of experience working as a professional economist in financial services. Prior to establishing DeSaque Macro Research, Said held positions as Senior Economist at Robert W Baird and William Blair. He began his career as a graduate at PaineWebber in 1986, where he eventually became Head of the London Economics Department.

Said takes a very keen interest in international relations, along with their implications for economic development. His research interests include the economic transformation of China and its implications for global capital markets, particularly in the United States. He is a member of Chatham House in London.

The US economy and capital markets have historically been Said’s main focus of attention. He frequently presents his views to institutional investors in diverse geographic locations. In recent years, Said has also been carefully monitoring economic developments in Asia, particularly China and Japan.

US: Inverted Yield Curve No Longer Predicts Economic or Stock Market Recession

Global Economist, DeSaque Macro Research

Said Desaque

Global Economist

Macroeconomics

The reluctance of the yield on the 10-year US Treasury note to decisively head higher than 3% indicates that bond investors do not believe the economy has gravitated to a faster, sustained growth path.Historically, the Fed has regarded a recession as being the lesser of two evils compared to accelerating inflation, while, currently, the impending medium-term economic risks are tilted in favour of recession.A flatter yield curve can coexist with a strong economy for a prolonged period, as testified by the events of the late-1990s.Although the yield curve briefly inverted in 1998 due to the Asian financial crisis, a fortuitously sizeable policy rate buffer meant the Fed was able to quickly respond, and, consequently, avoid recession, in stark contrast to the current environment.The yield curve has historically been inverted whenever the unemployment rate reached current levels, thereby suggesting that long-term interest rates need to drift higher to avoid inevitable inversion based on the Fed’s current forward guidance.

The reluctance of the yield on the 10-year US Treasury note to decisively head higher than 3% indicates that bond investors do not believe the economy has gravitated to a faster, sustained growth path.Historically, the Fed has regarded a recession as being the lesser of two evils compared to accelerating inflation, while, currently, the impending medium-term economic risks are tilted in favour of recession.A flatter yield curve can coexist with a strong economy for a prolonged period, as testified by the events of the late-1990s.Although the yield curve briefly inverted in 1998 due to the Asian financial crisis, a fortuitously sizeable policy rate buffer meant the Fed was able to quickly respond, and, consequently, avoid recession, in stark contrast to the current environment.The yield curve has historically been inverted whenever the unemployment rate reached current levels, thereby suggesting that long-term interest rates need to drift higher to avoid inevitable inversion based on the Fed’s current forward guidance.  

Yield Curve Inversion and Forward Guidance: Will the Fed Get Lucky?