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'We're really overdue' for a recession, analyst says

Katie Krzaczek
Associate Editor

As the ongoing trade negotiations between the U.S. and China continue to shake up markets, some indicators are pointing toward a recession in the near-term.

Rebecca Walser, president of Walser Wealth Management, told Yahoo Finance that the recent dip in the 10-year Treasury yield is one of the signals of an impending economic downturn.

“The inverted yield curve alone has been a very good barometer...of a coming recession,” Walser told Yahoo Finance’s YFI AM. “If you look at economic cycles, we're really overdue.”

The 10-year Treasury yield dropped to 1.690% on Monday, dipping 4.1 basis points.

“Everything is cyclical, including this economy, even though President Trump doesn't want it to be the case,” Walser said.

The president’s own recent threat of a 10% tariff on $300 billion worth of Chinese goods beginning September 1, coupled with the anti-government activism in Hong Kong, has been sending global markets into a frenzy that’s unlikely to calm down any time soon.

Protester are seen in Hong Kong International Airport in Hong Kong on August 12, 2019 , Tens of Thousands Protester are seen gather in Hong Kong international airport in protest of Police Brutally and the extradition bill -- Protester Clash with Police yesterday in Hong Kong -- Hong Kong International Airport suspended Flight Operation at at 15:45 Local Time Today. (Photo by Vernon Yuen/NurPhoto via Getty Images)

A recent report from Societe Generale said the probability of the trade dispute between the U.S. and China being resolved before the 2020 election is “less than 50%.”

“The U.S. decision to label China a currency manipulator sets a dangerous precedent, also for other U.S. trade negotiations, as the decision is inconsistent with the rules the U.S. has established,” the report said.

Walser agreed, telling YFi AM that China is probably looking to hold out on a deal until Trump’s first term is up.

“China strategically...is just trying to outlive Trump,” she said. “If he doesn't get re-elected, they'll succeed.

“President Trump, though, has a lot of things up his sleeve,” Walser added. “I wouldn't count him out. He is an immaculate chess player.”

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