The state of the economy
Whether we’re moving towards an economic recession is on the minds of traders everywhere. While no expert can accurately predict future developments, most recession indicators are pointing towards an economic slowdown.
The inverted yield curve is one of the most reliable recession indicators, with a recession generally occurring about 22 months after the emergence of a yield curve inversion. With further rate cuts from the FED anticipated in the near future, you can clearly identify an inversion based on average yield figures.
Saxo´s analysis shows that the best performing market sectors in a bearish economy differ from those in a bullish environment. Further, the analysis suggests that the worst performing sectors in a recession include financials, energy, industrials and materials, while the best sectors include health care, communications services and information technology. With a recession potentially around the corner, tactical asset allocation and short-selling of derivatives, such as CFDs, are two approaches that could see you not only alleviate the downside risk of a bear market, but capitalise on it too.
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Trading CFDs is a highly effective way of capitalising on a contracting business cycle, as they allow you to go short, and long, using leverage. With our award-winning SaxoTraderGO platform, you can access more than 9,000 CFDs on stocks, ETFs, indices, index options, forex, bonds and commodities with margin rates starting at 2.5%*.
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