Is the Yield Curve a Reliable Recession Signal Anymore?

We’re right in the time period after a yield curve inversion that one should expect a recession. But doubts are now cropping up about the reliability of the curve as a predictor of the business cycle. If we think of the inversion as a signpost of vulnerability though, the inversion makes a lot more sense.

You’ve heard me put recession indicators into two buckets, differentiating between what I call real economy recession signals and market recession signals. Well, the market-based signals have been screaming recession for months. Meanwhile, the real-economy ones have stayed pretty solid. Plus, consumer sentiment has turned up so much recently, that you kind of believe the real economy ones. But, which one will prove right?