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Bad Omens Are Everywhere
by James Rickards Daily Reckoning
Analysts note that U.S. inflation is coming down and that interest rates are coming down at the same time.
Many assume this is good news for the economy and especially good news for stocks. But that superficial analysis does not hold up to scrutiny.
With regard to interest rates, it is true that the yield-to-maturity on 10-year Treasury notes has dropped from 5.0% to 4.33% in recent weeks.
But the drop in rates does not reflect a prosperous economy or a more benign environment for borrowers. It reflects a U.S. economy that is entering a recession, possibly a severe one.