The indicator with an almost perfect record of predicting US recessions is edging towards a tipping point
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- The US yield curve is flattening, a normal scenario at a time when the US Federal Reserve is lifting interest rates.
- When the curve has turned negative in the past — where short-dated yields are higher than for longer-dates — it has almost always indicated that a recession will occur within two years.
- Macquarie Bank doesn’t expect the curve to turn negative until the end of 2019, but it says 2020 will be a “most interesting year”.
Nearly a decade after the worst economic downturn since the Great Depression, markets are now starting to think about when the next US recession might hit.
The US yield curve — the difference between short and longer-dated bond yields — is continuing to flatten, and may go negative in the not-too-distant future.See the rest of the story at Business Insider
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