Investing.com UK - Financial Markets Worldwide
Get 40% Off
Get 40% Off
🚨 Volatile Markets? Find Hidden Gems for Serious Outperformance
Find Stocks Now

The Next Recession: Redditors Say It's 'Usually Right After The Fed Pivots And Starts Cutting Rates'

Published 12/04/2024, 19:37
Updated 12/04/2024, 20:40
© Reuters. The Next Recession: Redditors Say It's 'Usually Right After The Fed Pivots And Starts Cutting Rates'

Benzinga - by Surbhi Jain, .

Concerns about economic downturns are resurfacing, at least on Reddit.

With a chart depicting Treasury yield spreads, the post invited Redditors to weigh in on their predictions and insights regarding the possibility of a recession.

See below.

It’s been almost 2 years since the Yield Curve inverted. When’s that recession happening again?

byu/qscvg inwallstreetbets

Broad U.S. equity market ETFs such as the SPDR S&P 500 ETF (NYSE:SPY), the iShares Core S&P 500 ETF (NYSE:IVV), the Vanguard S&P 500 ETF (NYSE:VOO) often serve as barometers of the economic situation.

Also Read: Consumer Sentiment Worsens In April, Inflation Expectations Rise Further: Stocks Fall, Gold Surges Above $2,400

Insights from Redditors:

  • Timing and Rate Cuts: User ElevationAV suggests that recessions often follow after the Federal Reserve pivots and begins cutting interest rates. However, RiskRiches challenges this notion, suggesting that weak market conditions typically precede rate cuts, leading into a recession.
  • Causes of Recessions: According to Western_Objective209, most recessions are triggered by prolonged periods of high interest rates. Expressing concern about the current economic climate, they predict a recession within the next three months, citing flat inflation as a contributing factor.
  • Market Expectations: Mountain-Bar-2878 speculates that markets would respond favorably to expected rate cuts if accompanied by a decrease in inflation. However, they anticipate a negative market reaction if rate cuts are prompted by unforeseen economic disruptions.
  • Interpreting Recession Definitions: Redditor RoundTableMaker highlights the complexity of defining a recession, distinguishing between stock market downturns and economic recessions. They note that while the stock market experienced a downturn last year, it did not correspond to an economic recession.
    • 3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

    Some Reddit users anticipate a looming recession, citing historical patterns and current economic indicators. Others remain cautiously optimistic about the resilience of the markets.

    As discussions evolve, insights from online communities like r/wallstreetbets provide valuable perspectives for investors navigating uncertain economic terrain.

    Read Next: Never Mind Jerome Powell? Bullish Analyst Predicts Over 3 Rate Cuts This Year, Calls Recent Inflation Spike ‘Statistical Aberration’

    Image: Shutterstock

    © 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

    Read the original article on Benzinga

    Latest comments

    Install Our App
    Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
    Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
    Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
    It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
    Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
    © 2007-2024 - Fusion Media Limited. All Rights Reserved.