Yield curve inversion still tends to signal trouble ahead – Fed economists
The term spread has a “strikingly accurate record” for forecasting recessions, say researchers
The current “inversion” of the yield curve in the US does not appear to be significantly different from other similar episodes, which have tended to presage economic slowdowns or recessions, according to researchers at the Federal Reserve Bank of San Francisco.
Michael Bauer and Thomas Mertens write that the term spread, or the difference between short and long rates, has a “strikingly accurate record” for forecasting recessions. “Periods with an inverted yield curve are reliably followed by
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