The collapse of Silicon Valley Bank has led to a surge in signs that a recession is likely.
After SVB’s sudden Friday implosion and Sunday’s federal takeover of credit lender Signature Bank, investors appear to be betting that a recession is in store.Prior to the bad news about the banking sector, more economists had been suggesting that the Federal Reserve might be able to bring down inflation without plunging the economy into recession, but now economic indicators are making that scenario look less likely.The markets are reacting to the Silicon Valley Bank fallout.
Those two yields are also inverted, meaning the shorter-term yields are higher than the longer-term ones. Yield curve inversions are a top warning of recessions, as they show investors expect growth to drop in the weeks ahead. Researchers at Goldman Sachs recently predicted that housing in several overheated cities in the western part of the U.S. will see massive price declines this year. The firm predicts that places such as Austin, San Jose, Phoenix, and San Diego will grapple with price declines of more than 25% from their most recent high over the next year or so, owing in part to the Fed’s rate hiking.
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