Reminder - yield curve inversion remains stubborn

… still forecasting recession.

The red line perked above one around November '22, marking inversion: Chart

Time gap between inversion and onset of recession historically: 6-22 months (expectation 12-18 months):

For now, no sign of the Fed buying up bonds again:

Then again, the S&P 500 is making all time highs. Perhaps this time it’s different.


Official Treasury curve shows rising rates from 5 yr to 20. Maybe as far back as 2 yrs to 30 yrs but bumpy. Curve is still inverted but flattening.

Previous posters seem emphatic no recession, but we shall see. Impact of rising interest rates is still coming as borrowers are forced to refinance at much higher rates.

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I’m not one of those, I believe a recession is entirely possible, but if it happens I would expect it late in the year, and not to be “declared” until 2025.

I base that on the fact that growth in the last quarter was stellar, the first month shows no signs of slowing down, no mass layoffs, etc. Since it takes two quarters to declare a recession (not by NBER, but they’re even slower) that means best case it could happen by August? September? But that would require a quick reversal right now and I don’t see that on the horizon.

None of that means it couldn’t happen, of course, maybe the office real estate recession will cascade and take some banks down or something, and there’s always the chance of a black swan - but absent that, there’s no discernible clouds on the horizon. The market is rich, but holding. Inflation is abating. Employment is full. Infrastructure spending is starting to be felt. It’s an election year, tens of thousands will be hired for campaign and set up. Billions will be spent in media and elsewhere. Things look pretty good to me.

(That said, the market is rich, not a lot of bargains out there. Best for me right now is laddered CD’s paying better than inflation - with a couple of opportunistic equities here and there.) Sitting on tons of gains in everything from Berkshire to Costco, some pharma, oils and others, so I’m not selling, either.


There is always a recession coming. But I don’t think it is coming soon. Refinancing at higher rates is bad if you own commercial real estate, but the rest of the economy has adapted to higher rates with minimal problems.

That said, there are indications the Fed doesn’t believe we are headed for recession and interest rates are likely on the way down.


We are looking at real estate loan failures. Banks.

We might conclude 18 to 22 months for a recession. I do not know where that places a recession.

The country will do well either way. The recession will be shallow.

Activity won’t stop for the recession in the factory buildout. Just lowers the cost of doing business.

The loans are getting more and more problematic now.

It is very early in the year to know if we will get seasonality in the SPX and Compq. I think we will.

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Today’s headline, gift article:


Yes, but if we don’t have a recession this year, we’ll have one next year. Or the year after that. Or after that…




Ah, what the heck. Today’s WSJ. Don’t think they offer the “gift” option, but the headline tells the story.

For Retailers, Business Is Back and Landlords Say No More Rent Discounts

Landlords’ increasing leverage is sign of retail real estate’s recent strength


I agree. It is very unlikely that they would declare a recession, or the end of a recession, this close to a major election. The last time they (NBER) delayed declaring the end of a recession (Dec 1992), it very likely cost the incumbent his re-election!

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It looks like the chart is comparing 5 yr vs. 3 month, the original study by Campbell was 10 yr vs. 3 mon. and remaining inverted for a quarter. (can’t see if he means a physical quarter or 90 days).

Anyway, 10 yr. vs 3 m shows an inversion and has been persistent since late 10.22. Lag time usually between 12-18 months so we are due any time now.

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Meanwhile the Feds continue to ask what is the “tipping point” interest rate. If we are above that can the economy continue to grow? If we are below that don’t we expect more rate increases? (And why is it now so high compared to previous experience?)

The time lag statistics behind my second link compare to the 5y that’s why I chose that. As you point out, 3m/ 10y inverted at the same time, here is that chart $UST10Y | SharpCharts |