Inverted Yield Curves Open the Door for Alternative Opportunities

Given the recent move in rates, there has been discussions around whether or not the old economics metrics and indicators are still effective in the current market environment. 

It goes without saying that behind all of these indicators, lie investors’ sentiment and market cycles, which are cyclical by nature. There are other indicators such as global PMI (below 50), LEI (leading economic indicator compiled by conference board), US consumer sentiments, etc., but the traditional correlation that two quarters of GDP contraction equals recession continues to be proven true. 

In this market, it is difficult to predict and forecast given the uncertainty across the globe and one of the key contributing factors to where we stand now comes from geopolitics, which leads to supply-driven inflation, rather than being demand driven.

Regardless of the indicators or signals, we all acknowledge that rates are on an upward trend, whether or not they are inverted. Bonds yields are going up, both the financing and investment environment are getting tougher.  

Perhaps we should all keep an open-mind to embrace the fact that alternative financing and investment channels are the new "norm". Whether it is digital assets or private credit opportunities, we should gear up and get up to speed on the latest market trends so as not to miss out in the near future.

The views expressed herein are those of the author(s) and not necessarily the views of FTI Consulting, Inc., its management, its subsidiaries, its affiliates, or its other professionals. 

FTI Consulting, Inc., including its subsidiaries and affiliates, is a consulting firm and is not a certified public accounting firm or a law firm.