Tuesday, May 28, 2024

When do short term interest rates above long term ones signal a recession?


An inverted curve indicates that investors expect rate cuts, but it doesn’t explain why they are making those wagers. 
Bets on cuts:
  • could reflect some chance of a recession, but also 
  • some probability of a benign scenario, with the Fed trimming rates as a precautionary measure even as growth remains stable.
WSJ: [slightly re-formatted]

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