National Activity Index, SPX, & the 10 year yield
This long term chart compares the SPX (orange), US10Y (white) and the Fed's National Activity Index (blue).
Note the extended periods of the NAI which remain below 0 marking recession.
The 10 year yield tends to peak well in advance of the next recession. On a daily basis we see ongoing concern about the 10y-3mo inverted yield curve as an indication of looming recession. (However we've yet to see inversion of the 10-2 slice of the curve.)
Despite the low unemployment rate of 3.6%, there has been sharp rise in expectations for Fed cuts in the next 6 months.
Moodys: "The implied probability of a fed funds rate cut at the Federal Open Market Committee’s July 31 meeting
recently soared to 72% mostly in response to Jerome Powell’s apparent willingness to heed the recessionary warning of a possibly persistently inverted yield curve."
A declining economy would result in falling inflation expectations and lower prices for materials and products.
Recessions are often slow to arrive, often 12 to 18 months after a treasury yield curve inversion occurs.
Note the extended periods of the NAI which remain below 0 marking recession.
The 10 year yield tends to peak well in advance of the next recession. On a daily basis we see ongoing concern about the 10y-3mo inverted yield curve as an indication of looming recession. (However we've yet to see inversion of the 10-2 slice of the curve.)
Despite the low unemployment rate of 3.6%, there has been sharp rise in expectations for Fed cuts in the next 6 months.
Moodys: "The implied probability of a fed funds rate cut at the Federal Open Market Committee’s July 31 meeting
recently soared to 72% mostly in response to Jerome Powell’s apparent willingness to heed the recessionary warning of a possibly persistently inverted yield curve."
A declining economy would result in falling inflation expectations and lower prices for materials and products.
Recessions are often slow to arrive, often 12 to 18 months after a treasury yield curve inversion occurs.