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A Bird's Eye View Blog

Fireside Charts: World's 5 Largest Economies Now in Manufacturing Recession, EM Currencies Struggling, and the 30-Year Treasury Hits Record Low

By:BCM Investment Team | Date:Aug28, 2019 | Category: Equity, Economics, Market Highlights, Fireside Charts

Manufacturing measures are still top of mind for us today as, while we've seen improvement in some regional prints, the U.S.'s Monday slide into contraction means that the world's five largest economies are now in manufacturing recession. While some, including President Trump, lay blame at the Fed's feet, trade war anxieties seem to be the main topic of discussion. And that conflict, in addition to the Yuan's ongoing decline, is certainly having an effect on emerging markets. EM currencies continue to sink and Mexico's GDP is officially in contraction, registering zero growth in Q2. Finally, as the yield curve inversion deepened in the U.S., the 30-year Treasury yield hit a new record low. Could the sharp rise in demand for long-term fixed income investments indicate that the markets expect inflation to remain stagnant?

1. As we posted on Monday, the U.S. has entered a manufacturing contraction. The good news is that the Dallas Fed had a nice snap-back and the Richmond Fed fought back to just barely growing, even if the KC Fed was a dismal bust...

 

Source: WSJ Daily Shot, as of 8/27/19

 

 

2. And European Manufacturing appears to be stabilizing, but a reading less than 50 is still shrinking.

 

Source: WSJ Daily Shot, as of 8/27/19

 

 

3. Will long-term U.S. Treasuries join the $17 trillion of other government bonds that have negative yields?

 

Source: WSJ Daily Shot, as of 8/27/19

 

 

4. China continues to let their currency weaken...

 

Source: WSJ Daily Shot, as of 8/27/19

 

 

5. The trade war, including China's unofficial devaluation, is wreaking havoc with other EM currencies.

 

Source: WSJ Daily Shot, as of 8/27/19

 

 

6. Our southern neighbor's GDP entered contraction. How has replacing NAFTA helped them?

 

 Source: WSJ Daily Shot, as of 8/27/19

 

 

7. Knowledge can be powerful...

 

Source: WSJ, as of 8/27/19

 

 

8. Especially in the medical field, where the number of clinical trials in gene therapy has more than tripled since 2015!

 

Source: WSJ, as of 7/28/19

 

 

 

As you've heard many times now, an inversion in the 10-2 year yield curve has historically signaled an oncoming recession, and has preceded every recession since 1955. Though consumer confidence in the U.S. remains high, investment losses could be imminent. Are you prepared? Click below to learn more about what investment losses mean to investors in terms of returns, time, and dollars.

 

 

Full Post: Investment Losses

 

Disclosure: The charts and info-graphics contained in this blog are typically based on data obtained from 3rd parties and are believed to be accurate. The commentary included is the opinion of the author and subject to change at any time. Any reference to specific securities or investments are for illustrative purposes only and are not intended as investment advice nor are a recommendation to take any action. Individual securities mentioned may be held in client accounts.