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US Treasury Yield Curve Is One of the Most Inverted in History

Spreads between 3-month T-Bills and long-dated notes and bonds are at extremely inverted levels. This is a strong recession signal.
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US Treasury Yield Spreads 2022-11-16

Strong Recession Signal

  • Since 1990, the spread between 30-month T-Bills and the 10-year Treasury Note was only more inverted ahead of the 2001 recession.
  • Since 1990, the spread between 30-month T-Bills and the 30-year long bond has only been more inverted a couple of times. 

This is a very strong recession signal.

Reducing Inflation Without a Recession Might Not Be Feasible

It's unusual for the Fed to be this candid but Kansas City Fed President Esther George says Reducing Inflation Without a Recession Might Not Be Feasible

“I’m looking at a labor market that is so tight, I don’t know how you continue to bring this level of inflation down without having some real slowing, and maybe we even have contraction in the economy to get there,” said Kansas City Fed President Esther George, who is set to retire in January.

Some of Ms. George’s colleagues have recently said that they still see a way for the Fed to bring inflation down without a serious downturn, but Ms. George was more circumspect in an interview Tuesday.

“I would love if there was that path, and I’ve seen people paint that path,” she said. “I have not in my 40 years with the Fed seen a time of this kind of tightening that you didn’t get some painful outcomes.”

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