eResearch | This past week saw a dramatic drop in 10-year U.S. Treasury interest rates and the corresponding yield spread with 3-month Treasuries. This 10-year/3-month metric is well and truly inverted. However, our preferred single metric is the 10-year/2-year yield spread and it is far from inverted. eResearch actually monitors two series of yield spreads in order to derive our Recession Barometer readings. One series is still safely below inversion but the other has just tipped into inversion territory this past week. While we still predict a recession would occur at least 15 months after inversion occurs, we are still not pulling the trigger on the timetable just yet. We need more confirmation. Nonetheless, the trend is becoming worrying.
You can access this week’s Recession Barometer report here: RB_053119
