Recession Indicator Going Off

[J. Mitchell Bernier]

Wells Fargo recently put out a report detailing the correlation between the inversion of the 10yr vs 1yr Treasury and predicting recessions. What they found was that when the yield curve inverted for the 10yr vs the 1yr, it predicted a recession 91% of the time with a 12-month lead time. Plus, the longer it stayed inverted the deeper and more severe the recession. As of now, the 10yr vs 1yr yield curve has been inverted for over 3 months. 

I guess we will see how much longer this goes and what it means for our investments. 

Wells Fargo - One Spread to Rule Them All: Is Recession Coming? (bluematrix.com)

[Jeremy H.]

Ah we are already in one, it just hasn't completely hit yet. Unemployment will increase next, home prices are coming down (and will continue to further), stock market is down 25% YTD, we just haven't felt the full effects yet, but we are mid recession. The inflation data was horrible core rate of 6.6% YOY and increase of 0.6% from last month, so the interest rates will continue further to slow the inflation and the housing market needs a reset. 

I would keep liquid capital and only make amazing deals, right now, that's my strategy now. Definitely still in the market but it needs to be a great deal (like always) because we will, imo, see these prices fall even farther. It's gonna take 6+ months I believe to see the trough. Everyone wants to compare comps to 6 months ago but the RE market has changed rapidly in the last 6 months. If you bought in mid 2021 to beginning of 2022 you are gonna be taking an L in the equity column for awhile.