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What can the average founder, employee, and person do in the face of this news? I understand that it’s scary, but what can we do to turn that fear into an actionable checklist?
Make sure your finances are in reasonable order in case you get laid off:
* https://www.reddit.com/r/personalfinance/wiki/commontopics
Not all economic downturns are as bad as the Great Recession was.
More practically, at least for those thinking of buying a home on a standard 30-yr fixed mortgage, since it seems like the consensus among investors is that interest rates for long-term debt will fall it makes little sense to buy anytime soon if you can wait... Or does it make sense to go with an adjustable rate mortgage instead?
Simple explanation of what this means. Here are current yields on Treasury Bonds (expressed as an annualized rate)[0]: 1 Mo - 2.47 2 Mo - 2.47 3 Mo - 2.46 6 Mo - 2.49 1 Yr - 2.41 2 Yr - 2.26 3 Yr - 2.19 5 Yr - 2.21 7 Yr - 2.32 10 Yr - 2.43 20 Yr - 2.68 30 Yr - 2.87 In normal times, rates are higher for longer terms. This makes sense: the longer I tie up my money, the higher interest rate I'm going to want. However, r…
Thanks for this. Question: is there any rational reason an investor would invest in a 10-year bond when they could get a better interest rate on a six month bond? It seems like an inversion would result in near-zero long-term bond purchases.
Simple explanation of what this means. Here are current yields on Treasury Bonds (expressed as an annualized rate)[0]: 1 Mo - 2.47 2 Mo - 2.47 3 Mo - 2.46 6 Mo - 2.49 1 Yr - 2.41 2 Yr - 2.26 3 Yr - 2.19 5 Yr - 2.21 7 Yr - 2.32 10 Yr - 2.43 20 Yr - 2.68 30 Yr - 2.87 In normal times, rates are higher for longer terms. This makes sense: the longer I tie up my money, the higher interest rate I'm going to want. However, r…
Thanks for this. Question: is there any rational reason an investor would invest in a 10-year bond when they could get a better interest rate on a six month bond? It seems like an inversion would result in near-zero long-term bond purchases.
(What might be confusing at first is that interest rates are usually "annualized", that is, presented as if they were for a single whole year. You won't actually receive 2.49% of what you paid for the 6-month bond; you'll receive something like 1.24%, and you have to invest again for another 6 months to reach that 2.49%. If that investment is no longer available, you might not be able to do that.)
* https://seekingalpha.com/article/4250934-yield-curve-inversi...
This means it will probably occur in the middle of next year's US presidential election. :)
It should also be noted that there is a delay between and inversion and a recession, with an average of about a year: * https://seekingalpha.com/article/4250934-yield-curve-inversi... This means it will probably occur in the middle of next year's US presidential election. :)
Any chance the US can extend its terms? An election seems to last an entire year and be one of the most toxic events possible online.
More practically, at least for those thinking of buying a home on a standard 30-yr fixed mortgage, since it seems like the consensus among investors is that interest rates for long-term debt will fall it makes little sense to buy anytime soon if you can wait... Or does it make sense to go with an adjustable rate mortgage instead?
Earlier quoted context omitted.
For example, paying down debt would be a good idea. [sound of numerous economists jumping up and down saying this would turn prediction of recession into self-fulfilling prophecy] Also, holding off on any major new purchases like houses or new cars. [sound of foresaid economists moaning and putting their heads in their hands in despair]
> For example, paying down debt would be a good idea. Opposite from a financial standpoint: if interests rates lower in the future you will be able to refinance. From a job-vulnerability perspective it always lowers your risk though: better not to be very leveraged if your income can fluctuate.