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Normal Yield Curve Doesn’t Mean Everything’s Normal
As we count down to this month’s meetings of the European Central Bank and the Federal Reserve, both of which are expected to maintain their monetary easing stance, the U.S. yield curve has been quietly undoing the inversion that had raised alarms in the corridors of the world’s two most systemically important central banks. Just as I had argued that the inversion was not a reliable signal of a coming U.S. recession, we should not rush to see this return to more normal conditions as a comforting green light for what’s ahead for the economy. Instead, it is yet another reminder of how traditional market signs ... (full story)