For his part, Chicago Fed President Charles Evans said Monday that yield curves recently have been “throwing off a slightly higher probability of recession” but they have “ often misfired” in the past. And Boston Fed President Eric Rosengren said Tuesday he doesn’t “take nearly as much information from the shape of the yield curve as some people do,” though it should pick up if the economy grows as he expects.
Former Fed Chair Janet Yellen said in Hong Kong Monday that inversion happens very easily and doesn’t signal on its own that a U.S. recession is imminent.
A simple model shows the probability of a U.S. recession at a “relatively high 20 percent over the next 12 months,” according to Westpac Banking Corp. foreign-exchange strategy head Richard Franulovich. However, “a broader recession probability model that incorporates equities, credit spreads and the ISM manufacturing survey points to very negligible recession risk.”
Franulovich highlighted that “equity market momentum remains much stronger than what is typically seen into recessions,” and “the same applies for both the ISM index and credit spreads.”
This article provided by Bloomberg News.