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It's All About the Timing: 2020 and US Recession Probabilities

It's All About the Timing: 2020 and US Recession Probabilities

policytensor
Mar 23, 2019
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It's All About the Timing: 2020 and US Recession Probabilities
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So the US yield curve has inverted in earnest. Inverted yield curves, and compression of term spreads in general, predict US recessions. This is because bank earnings are a linear function of the term spread — their business model is to borrow short and lend long. When spreads get compressed, the present value of future bank earnings falls along with fo…

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