A U.S. Recession Indicator Flashes Red for Leuthold's Paulsen
- Baa rated corporate bond premiums have risen above 2%
- Less-followed indicator ‘should not be ignored,’ Paulsen says
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One gauge of recession risk with a “pretty good” track record over the last half century has just raised a cautionary signal, according to the Leuthold Group.
For the first time since just prior to the 2007-2009 recession, premiums on the lowest-rated tranche of investment-grade U.S. corporate bonds have risen to 2 percent after being below that level, according to data compiled by the Minneapolis-based research group. The analysis looks at the gap in yields between corporate debt rated Baa by Moody’s Investors Service and those on 10-year Treasuries.