Rising Global Recession Odds Signal More Credit And Market Risks For Financial Institutions

Financial institution risk managers, regulators and legislators should intensify their focus on macroeconomic and market data that are signaling rising odds of a global recession. Today’s 10-year U.S. treasury falling significantly to 1.59% and below the equivalent rate for the U.S. 2-year treasury bond, for the first time since 2007, is an ominous sign for the U.S. economy. Financial institutions, especially, are incredibly sensitive to interest rate signals. This inverted yield curve, while not guaranteed, signals that we might soon enter a recession. Even before today’s curve inversion, the Federal Reserve’s recession probability model was already showing a 31.5% chance of a recession in the next 12 months; this recession probability is slightly higher than it was in July 2007. Read more at Forbes.