Yield curve predictions take time: Financial markets have been signalling the risk of a downturn, most vividly through an inverted yield curve which has a long and respected history of accurately foreshadowing downturns. Looking at the 10-year minus fed funds curve, inversion first occurs, on average, just over 14 months before the start of recession (with a range of 8-to-20 months) dating back to the late 1960s. Peak inversion occurs roughly six months before the onset of recession. Given that the curve first inverted in November 2022, and if the May depths hold, that would place the crosshairs of recession somewhere around the end of the year—later than many initially expected, but not out of line with historical norms.
Where's the Recession?
