What ‘Usually’ Happens To The S&P After Curve Inversions

Stocks are looking past rising yields in part because the move in reals merely marks a retracement to levels seen midway through February. And when it comes to the curve, equities tend to do reasonably well following 2s10s inversions, albeit with a wide distribution of outcomes. Those are two key takeaways from Goldman's David Kostin who, in his latest, noted that the recent rise in 10-year nominals counts as a three standard deviation event. Generally speaking, moves of that magnitude (illust

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One thought on “What ‘Usually’ Happens To The S&P After Curve Inversions”

Re: Looking past

If there is a common thread in stocks or speculation it’s risk. Risk valuation is often connected to casino probabilities and interpretation of reward related to risk. Monte Carlo geometry.

I’m fascinated by the evolution of risk perception as a social and phycological phenomenon that is metaphorically similar to airborne transmission, passing within communities, exposing people, who act as carriers that spread sequential strands of information that lies dormant, yet brewing and growing.

That risk metaphor is a paintbrush that paints a mental picture, where the content is about the assumption to look past and tune out gut feeling or to ignore risk. It’s a matter of training oneself to shrug shoulders and dismiss realities as being inconsequential.

Looking past risk is like a newfound cousin who’s part of the disinformation family and part of a genealogical inheritance of propaganda that’s almost biblically rooted in the seeds of greed.

The pandemic certainly exposed raw nerves and help expand political polarization, but it pushed society into a mutation level in terms of risk management and our new heightened ability to look past economic events.

As COVID had taken a breather, we’ve been able to tune out the pandemic costs and the two month recession of 2020, tuned out an attack on the US capital, tuned out millions of deaths, tuned out Ukraine, inflation, inversions and basically everything, as we turn back to the focus of spinning the roulette wheel, knowing in our hearts and minds that a bet on red seven will buy daddy a new pair of shoes.

Who’s got time to worry about details when our smartphones connect us to Monte Carlo?