The statistic they are th about has been this way for several years.
Exactly! And it could be the way it is now for a very long time. Here’s hoping!
The strange thing is that the two year vs. ten year spread can bounce around all it likes, but doesn’t correlate at all to a coming recession.
I think it may be because the Fed parks so many funds in the one year treasuries, but am not sure. In 1991, I did an exhaustive study using daily data since WWII. NONE of the other yield spreads had the perfect record of the one-year vs. ten-year CMT yields. Of course, it COULD some day go south, but hasn’t yet. I’ve been able to predict three of the last three recessions without false signals using that particular spread. My students think I know something special. Not really, most good economists know about the spread and its predictive power. Besides, I left my portfolios unchanged from 2006 to 2008 even though I knew were going into a recession. When I tell them that, they realize that I am an idiot, not a genius, after all.
But it’s always a little amusing, and little bit annoying, when some analyst with any kind of name recognition suddenly discovers yield curves.