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U.S. Recession Odds Climb to 55% as Yield Curve Flattens: Chart

Bloomberg business news

U.S. Economy: Data and the Fed's Dot Plot

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.