The yield curve* has inverted before all of the last six recessions
*US 10Y generic government yield minus US 2Y generic government yield
A reliable indicator of future recessions is flashing red. The difference between the 10Y US government yield and the 2Y government yield turned negative in late August (see chart above). This has happened before each of the last six recessions, Nobel Prize-winning economist Paul Krugman noted in his New York Times column this month. With a US slowdown approaching, demand for overseas goods is likely to weaken, leading to a deceleration of global trade as well. The ongoing trade war between the US and China has heightened risk aversion and put the brakes on the current expansion. Slowing chemical cargos could put downward pressure on freights, time charter rates, and vessel prices.