Thursday, October 31, 2013
Bloomberg's index of financial conditions reached a new all-time high today. Swap, muni, agency and credit spreads are generally low, liquidity conditions are excellent, the yield curve is positively sloped, implied equity index volatility is relatively low, and yields on Treasuries and corporate bonds are relatively low. With financial market conditions are as positive as they are now, a near-term recession is highly unlikely. I note that this index turned down more than four months before the last recession, and years before the 2001 recession.
Posted by Scott Grannis at 2:22 PM