Introduction
The recent inversion of the traditional 2Y10Y yield curve in the US has raised investors’ attention on the global economic outlook within the next 12 months to come. Unlike 6 months ago, the probability of a recession is not negligible anymore and many participants are questioning which asset will perform well in the current environment.
Even though the 2Y10Y yield curve is not inverted in all the developed economies, our GDP-weighed G7 yield curve is now standing a few basis points away from zero (figure 1, left frame). With the elevated political and economic