The yield curve — that chart line that plots the yields (interest rates) across different contract lengths (months, years, etc.) for a similar bond contract – tells economists much about the future direction of the economy. Does a flattening yield curve signal an impending recession?
Don’t jump to conclusions yet, writes RSM US Chief Economist Joe Brusuelas in the February edition of The Real Economy. He cautions against taking a “cookie cutter” approach to U.S. business cycles, and weighs a host of factors, including monetary policy, real interest rates and profound shifts occurring in the manufacturing sector, among others.
Read the latest edition of The Real Economy for a comprehensive take on the yield curve, corporate debt and yield spreads, labor trends and consumer sentiment: in aggregate they form a more complete picture of the economy’s direction in coming months.