, Columnist
A Recession Signal Is Hidden in U.S. Bond History
Ten-year Treasuries may hold the key to predicting the severity of downturns.
Will the next recession be mild or monstrous?
Photographer: Mario Tama/Getty ImagesThis article is for subscribers only.
It’s easy to sense signs of strain in the U.S. economy: inversion of the yield curve, lackluster jobs data and an escalating trade war with China. It’s more difficult to gauge when a slowdown turns into a recession. Predicting its severity – mild or monstrous? – is even more difficult.
Recent research by the Federal Reserve Bank of St. Louis suggests that real yields on 10-year Treasury bonds are the key to answering this question.