Bonds have been depreciating the most in years

Rising inflation and interest rate hikes by the Fed triggered an unprecedented sell-off in the US bond market this year. The price of 30-year US bonds has dropped by 14 percent. Polish bonds are also cheaper and dropped 4.9 percent since the beginning of the year.

According to Paweł Majtkowski from eToro, the yield on US bonds is a frequent indicator of the risk of a recession.

"This is important to stock traders because money is usually earned outside of recessionary periods, which are major losses. Each of the last 10 periods of the US recession lasted an average of 11 months and resulted in a 30 percent loss of capital. The best predictor of a recession is that there is a negative difference between the yield on 10-year and 3-month US bonds Currently, the interest on 10-year bonds in the US is 2.29 percent, and on 3-month bonds 0.44 percent This means that the difference is positive (1.85 percentage points) and is safe from the point of view of the risk of the recession. Therefore it seems that the fundamentals of the US economy are weakened by high inflation, but safe," the analyst said.

(WBJ)