Yield Curve Inverts in 28 Places: Recession Warning Resumes


After a brief respite, the yield curve is again flashing a bright recession signal. The curve is inverted in 28 places.

Automatic Pilot Spotlight

Let's flashback to Fed Chair Jerome Powell's statements following the December 19 FOMC meeting.

Powell was asked about the Fed's balance sheet and quantitative tightening.

We thought carefully about how to normalize policy and came to the view that we would effectively have the balance sheet run off on automatic pilot and use monetary policy, rate policy to adjust to incoming data. I think that has been a good decision. I think that the runoff of the balance sheet has been smooth and has served its purpose and I don't see us changing that. And I do think that we will continue to use monetary policy, which is to say rate policy as the active tool of monetary policy.

I commented Shut Up! Shut Up!

Automatic Pilot

Automatic pilot, what a hoot.

Today, I repeat, "What a Hoot".

The 7-year, 5-year, and 3-year notes all all about 50 basis points lower. And the yield curve is inverted in 28 places.

Yield Curve to Scale


  • The yield curve is inverted from the 1-year note through 13 years.
  • The yield curve is inverted from the 3-month T-bill through the 10-year note.
  • The yield curve is inverted in 28 places.

Those who thought the recession signal was over, thought wrong.

Mike "Mish" Shedlock

Comments (29)
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So,,,,, now we use artificially created cost of money stats, from overnight, through 30 years out, as an economic forecasting tool?

Garbage in, garbage out?


Canary in the mine,,,,


I've been consumed with watching the economy for the past 15 years or so. I knew something was wrong in 2007-2008, but I couldn't have predicted the crash of 2009, which lasted many years. However, I feel that something is different now. This long, slow recovery with 2.5-3 % GDP is a whole new phenomenon. It has changed the old dynamic of recession and recovery. Now it just might be slow and steady as she goes with minimal fireworks. The stock market is a different story and has been divorced from the economy for many years. Have faith.


We are headed for a 1/1/1 economy. 1% growth. 1% inflation costing $1T of debt per year.