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ASR in FT Unhedged: solving the puzzle of a strong economy vs. inverted yield curves

Beth McCann

5th JUL. 2023

The FT’s Rob Armstrong considers “how to balance evidence of a remarkably strong economy against …. inverted yield curves…. (which) for the past 60 years … has been a remarkably reliable recession indicator.”

He continues, “The solution to this puzzle may be a simple as timing.  As Dominic White of ASR pointed out to us…”

“…the 10 recessions the 10-year/three-month yield curve has predicted since 1957 (without a false positive), the average period between the first inversion of the curve and the official start of recession has been nine months. The range runs from four months (the 1960-61 recession) to 16 months (2007-09). This time around, the curve first inverted last October 18, a little under nine months ago. History has more time to be right.”

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