Yield curve inversion, recession risks & negative rates

Summary

The inversion of the US Treasury curve is associated with an exceptionally low term premium. Evaluating yield-curve signals is therefore complicated by compressed term premium. It might be useful to look at other indicators – financial cycle measures have been shown to predict future recession better than the term spread for a panel of countries. We will also discuss:

• Why are interest rates so low? Who is to blame?
• What do the economic schools tell us (Austrians, Keynesians, Monetarists)?
• Which theory has made the most accurate predictions (as experienced ‘live’ in the frontline of a bank treasury)?
• What is the impact on banks?
• What can and should the central bank do?

Presenters

Dr. Dora Xia: Economist, Monetary and Economic Department, Bank for International Settlements (BIS)
PD Dr. Andreas Blöchlinger: chief risk officer at Swisscanto Invest by Zürcher Kantonalbank

Chapter Event

In our chapter events – access for members only – we present one or more speakers to share knowledge, updates and best practises on a specific risk topic. In small groups of risk professionals you can exchange thoughts and test ideas. More on SRA chapters. This event is hosted by the chapter Regulatory Developments.