2023-05-09 02:25:00 ET
Summary
- It's true that the Fed is very tight and the yield curve is very inverted - both being classical precursors to recessions in the past.
- While some observers note with concern the unprecedented decline in the M2 money supply over the past year, I view it as a welcome return to something more normal - after all, M2 is still significantly higher than its historical trend vs nominal GDP.
- An easing of inflation would go a long way to restoring faith in the future since the market would view the Fed's job as mostly done - with declining short-term interest rates breathing life into most areas of the economy.
For further details see:
Swap And Credit Spreads Still Say No Recession