QVML - Bond Market Says No Recession In The Cards

• Inverted curves are a necessary but not sufficient condition for a recession.
• The yield curve inverts when the market senses that the Fed is so tight that the economy is at risk of collapsing, and that collapse would then prompt the Fed to ease.
• Low spreads mean the market thinks the economy is going to be healthy and corporate profits are going to be solid.
• Swap spreads are similar to CDS spreads, but they are more generic and reflect the risk of borrowing and lending between large institutional investors.
• Today the market is breathing easier than it was just a few weeks ago, and investors are more willing to take on exposure to risk.

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