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What Is the Probability of a US Recession? The Message from Yield Spreads

From stlouisfed.org

Congress has given the Federal Open Market Committee (FOMC) a dual mandate: to maintain stable prices and maximum sustainable employment.1 The mandate to maintain stable prices is generally thought to imply low and stable inflation, which the FOMC has specifically interpreted as a 2% annual change in the personal consumption expenditure (PCE) price index. After a recent burst of inflation to a peak of almost 7% in June 2022, PCE inflation has been declining back toward the FOMC’s 2% inflation target, while expected inflation—implied by bond prices and surveys—has remained consistent with the FOMC’s target. (full story)

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  • Category: Fundamental Analysis