Dow Futures Rocket but Fed’s Recession Alarm is Screaming

Dow Futures Rocket but Fed’s Recession Alarm is Screaming
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Historically, once the Fed’s yield curve-based recession indicator has pushed through about 30%, recession follows within 2 years, and usually less. The lone exception, 1967, is often argued by many to have correctly forecast an unofficial recession.

DJIA futures shot higher on Tuesday pointing to an open just shy of all-time highs. Despite the record figures, there’s a silent alarm going off: the dreaded yield curve inversion. The Federal Reserve uses this indicator to calculate the probability of a recession. And right now it’s flashing red, putting the chance of recession this year at 37%. The New York Fed uses the Treasury bond yield spread to calculate a 37% chance of recession in July 2020. Source: New York Federal Reserve, Board of Governors of the Federal Reserve; National Bureau of Economic Research. Historically, this indicator has preceded every major recession. The timing couldn’t be worse for the Federal Reserve…The Federal Reserve uses this indicator to calculate the probability of a recession.
The yield curve inversion happens when long-term bonds give out less than short-term bonds. In this case, the ten-year US Treasury bond yields […]

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