SSO - Yield Curve A U.S. Recession Signal? Maybe Not This Time
Recent declines in US government bond yields have led to a flood of articles discussing the likelihood of a US recession over the next 12-18 months. This is understandable, first given the relatively strong correlation between yield curve inversions and US recessions in the past and second, the extraordinary length of the current US economic expansion. However, we believe recent correlation-focused commentary misses a key point in terms of causation. There are in our view good reasons to believe that the recession signal from the flat US yield curve is a false positive.
A yield