, Columnist
There's a New Yield Curve to Predict Recessions
High-yield credit markets are a now a better barometer of economic conditions than Treasuries.
Junk bonds signal good times ahead.
Photographer: Mario Tama/Getty ImagesThis article is for subscribers only.
There have been plenty of warnings in recent months that a reduction in the amount of extra yield earned by holders of long-maturity Treasuries compared with owners of shorter-dated debt is a signal of an impending economic slowdown. The spreads between two-, five- and 10-year Treasury note yields are well below average. Should short-term rates move higher than longer-term rates, it’s a sure sign of a recession.
Or so the conventional wisdom goes.