No recession soon – the labor market is strong, market signals predictions
Barbuscia 7-29 [Davide Barbuscia, "US yield curve nears flip with jury out on recession signal", 07/29/2024, Reuters, https://www.reuters.com/markets/rates-bonds/us-yield-curve-nears-flip-with-jury-out-recession-signal-2024-07-29/] //nw-avis
The longest and deepest U.S. Treasury yield curve inversion in history, a key bond market signal of an upcoming recession, could be nearing its end.
While an inverted curve has typically preceded a recession, this time there is debate about the predictive power of the curve, with optimism that the U.S. could escape prolonged economic pain. Some indicators in recent weeks have pointed to a slowdown, but thanks to a resilient labor market.
"I'm not looking at it as recessionary as of now, I think it's a very different time," said Phil Blancato, chief market strategist at Osaic.
Investors observe the shape of the Treasury yield curve - which plots the yields of all Treasury securities - because it reveals market expectations on monetary policy and the economy. An inverted yield curve, which occurs when short-term debt yields more than long-term paper, has been a in nine out of 10 instances over the last 70 years, according to Deutsche Bank data.