U.S. Recession Odds Climb to 55% as Yield Curve Flattens: Chart
U.S. Economy: Data and the Fed's Dot Plot
This article is for subscribers only.
What are plummeting interest rates saying about the outlook for the economy? The spread between the yield on 10-year U.S. Treasury notes and two-year notes is the narrowest since 2007. A model maintained by Deutsche Bank analyst Steven Zeng, who adjusts the spread for historically low short-term interest rates, suggests the yield curve is now signaling a 55 percent chance of a U.S. recession within the next 12 months. That marks the highest probability generated by the model so far in this expansion, and may be a cause for concern as Federal Reserve officials meet this week in Washington to discuss next steps for policy.