The yield curve is predicting much worse than a recession.

Deep Inversion

Here’s the yield curve in what we may call the forward-rates representation. Each of the five graphs in the chart are spreads along maturity — the number of years until the payment on a zero-coupon bond. The first is the yield on the 6-month (mo) bill less the yield on the 3-mo bill (anchored at the Fed’s current policy rate). The second is 1 year less …