115. Does a flattening yield curve mean a US recession is on the way? (preview)
The spread of yield between short and long term US Treasuries is narrowing. It could even invert, meaning the yield is higher on short term Treasuries than long dated ones. This is precisely what happened prior to every US recession – so does that mean another is on the way. A listener to the podcast wrote asking why yield curve inversion is such a reliable indicator of recession, if indeed it is? Phil Dobbie gives a quick explanation of what yield curves are, and Prof Steve Keen gives his reasoning on why it is flattening in the US right now. And does it mean a recession is on the way?
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