On average, the US Dollar and gold prices have fared well at the onset of US recessions. Meanwhile, the 10-year Treasury yield, Australian Dollar, and S&P 500 have underperformed.
Average Snapshot
The chart below is a snapshot of how these assets performed during the onset of recessions ordered from best performing to the worst. The sequence is as follows: US Dollar, gold, 10-year Treasury yield, Australian Dollar and S&P 500. The availability of currency data meant I could only look back to 1979. For the rest of the assets, I was able to look back to 1969. The remainder of this article breaks down the individual performance beginning with the US Dollar.
tends to function as an anti-fiat instrument. When the return on cash dwindles, which is what usually happens during recessions, gold becomes relatively more attractive and vice versa.From this point forward, we are moving on to assets that underperform. Since 1969, the 10-year Treasury yield has declined by -1.6% on average during the onset of recessions . Factoring in Covid though, the up/down ratio is about 29%.
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