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