FRI - Resolving The Contradictory Signal Between The Yield Curve And Housing: Watch Corporate Profits
Introduction
Is your favored metric housing or the yield curve? Depending on which one you prefer, the economy is either careening towards recession or else “no worries.” Because the two very important leading metrics are giving completely different signals this spring. Is there a way to break the tie? I think there is, and I’ll explore it below.
The yield curve has not been a perfect indicator
Let’s start with the yield curve. At present everything between the Fed Funds rate and the three-year-bond is inverted (and largely has been for almost 6 months). The