A Deutsche Bank yield curve model says the odds of a US recession are now 55%. Specifically, the model notes the flattening of the yield curve, something I have mentioned numerous times recently.
Bloomberg reports U.S. Recession Odds Climb to 55% as Yield Curve Flattens.
Recession Odds
"What are plummeting interest rates saying about the outlook for the economy? The spread between the yield on 10-year U.S. Treasury notes and two-year notes is the narrowest since 2007. A model maintained by Deutsche Bank analyst Steven Zeng, who adjusts the spread for historically low short-term interest rates, suggests the yield curve is now signaling a 55 percent chance of a U.S. recession within the next 12 months."
Yield Curve Flattens Again
On June 10, I noted Yield Curve Flattens Again: 30-Yr Yield Just 19 Basis Points From Record Low
The chart has not changed much since then.
Recovery Increasingly in Question
- The 30-year long bond is just 19 basis points from the low set in January of 2015.
- The 10-year note is just 20 basis points from the low set in July of 2012.
Ten-Two Spread 2013-Present
Ten-Two Spread 1976-Present