Treasuries Showing 12% Chance of Double Dip Recession

U.S. government bond yields are signaling almost no chance of the economy slipping into another recession even as stocks and commodities tumble, according to research from the Federal Reserve Bank of Cleveland.

The 2.34 percentage point gap between yields on two-year and 10-year Treasuries is more than double the 20-year average and about the same as in 2003, just before gross domestic product rose 3.6 percent. The so-called yield curve suggests growth won’t slow to less than 1 percent and about a 12 percent chance of a recession in the next year, Joseph G. Haubrich, head of the banking and financial institutions group at the Cleveland Fed, and Kent Cherny, a researcher, wrote in a July 1 report.