Those looking for clear recession signals in Canada and Australia have them. Portions of the Canadian and Australian yield curves are now inverted. Canada has been in a state of inversion for at least four weeks.
Canadian Yield Curve
In Canada, the entire t-Bill portion of the curve from 1-month to 1-year is inverted with 2-year bonds.
Reader Gary pinged me with the above chart from the Financial Post.
I did a quick check on Australia. Here are the numbers from Investing.Com.
- 1-Year: 1.913%
- 2-Year: 1.782%
- 3-Year: 1.749%
- 5-Year: 1.971%
- 10-Year: 2.395%
As you can see, 1-year debt trades at a higher yield than 2- and 3-year debt. 1-year debt is very close to inversion with 5-year debt.
Australia 10-Year Bond Yield
Yield on Australia’s 10-year bond is approaching the spike low of 2.236% in March.
In December, Fortune Magazine reported Australia Is Going on 25 Years Without a Recession.
Australia has not had a recession since June of 1991. That track record will soon be over. Australia is in recession. All that waits is the official pronouncement.
On January 31, 2015 I proclaimed Canada in Recession, US Will Follow in 2015. That assessment on Canada was accurate.
Time will tell if the US went into recession in 2015. I believe the US did go into recession in December.
Mike “Mish” Shedlock