02/27/2025

The Fed's Leading Recession Indicator is Again Flashing a Danger Sign

Yield-curve inversions have had a strong but not perfect forecasting history

An ominous measure that the Federal Reserve considers a near surefire recession signal again has reared its head in the bond market.

The 10-year Treasury yield passed below that of the 3-month note in trading Wednesday. In market lingo, that’s known as an “inverted yield curve,” and it’s had a sterling prediction record over a 12- to 18-month timeframe for downturns going back decades.

In fact, the New York Fed considers it such a reliable indicator that it offers monthly updates on the relationship along with percentage odds on a recession occurring over the next 12 months.

Please select this link to read the complete article from CNBC.