QQEW - U.S. Probability Of Recession In Next 12 Months Hovers Near 70%
2024-06-11 08:10:00 ET
Summary
- We've been tracking a recession forecast model developed for the Federal Reserve Board by Jonathan Wright in 2006, which utilizes the U.S. Treasury yield curve as an input, while also factoring in the level of the Federal Fund Rate.
- In following months, the model's recession forecast went on to rise above an 80% probability, which would apply for the months between July 2023 and July 2024.
- In recent weeks, the spread between 10-year and 3-month constant maturity U.S. Treasuries has been rising, which points to the likelihood the downward trend in the recession probability's trajectory may soon reverse.
In a lot of ways, using the inversion of the U.S. Treasury yield curve to forecast recessions has become a lot like the old folk tale of the shepherd boy who cried wolf....
U.S. Probability Of Recession In Next 12 Months Hovers Near 70%