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ISMS 13: Global Interest Rates – Hikes Slow, Inversion Signals Recession

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World – End of DM ST rate rise, inverted yield curves remain, high rates in EM

Level – High ST global and EM rates, yield curve inversion

  • World ST rates at 5.3%, DM 3.6%, EM 7.7%
  • World 1yr rates at 4.4%, DM 3.4%, EM 5.8%
  • World 10yr rates at 4.1%, DM 3.0%, EM 5.6%

YoY rise – ST rates up massively YoY, small increase in LT rates

  • World 3m yield was up 3.2ppts, DM up 3.5ppts, EM up 2.6ppts
  • World 1yr yield was up 1.9ppts, DM up 2.6ppts, EM up 0.7ppts
  • World 10yr yield was up 0.9ppts, DM up 1.3ppts, EM up 0.1ppts

Progression – ST rate rise stopped in DM, DM LT rates fell MoM

  • 3m yield consistently grew over the past 12 months, but DM is flat MoM
  • World 1yr yield has fallen for the first time in March 2023, driven by fall in DM
  • 10yr yield has risen less extreme compared to short-term rates, again DM fell MoM

Yield curve –  Yield curve inversion steepened, especially in EM

  • World yield curve inversion has recently steepened
    • In March 2023, the yield curve inversion reached 1.2 ppts, which is higher compared to February 2023 at 0.9ppts
  • DM yield curve inverted as well, but less than World
    • Developed yield curve inversion reached negative 0.6ppts in March, a doubling of February 2023 negative 0.3ppts
  • EM yield curve saw much greater inversion
    • The inversion stood at 2ppts as of March 2023

Key points

  • High ST global and EM rates, yield curve inversion
  • ST rates up massively YoY, small increase in LT rates
  • ST rate rise stopped in DM, DM LT rates fell MoM
  • Yield curve inversion steepened, especially in EM

 

Click here to get the PDF with all charts and graphs