Looking at the past two decades, whenever the Fed has started tightening AND the yield curve has flattened, it has presaged a downturn in economic activity, as reflected in the ISM.

That is exactly the situation we find ourselves in at present:

Federal Reserve, Yield Curve and the Economy
click for larger chart
chart courtesy of Michael Panzner, Rabo Securities

Panzner used this measure because it has had a pretty good correlation with swings in year-over-year Gross Domestic Product data during the period.

Random Items:
Signs of listless economy persist
The Two-Income Trap
Inside Kerry and Bush’s Technology Agendas
The Longevity Gene
British firm finds the nuclear industry’s ‘holy grail’
Iran asks the world to nuclear party

Quote of the Day:
“The work of the individual still remains the spark that moves mankind forward.”
-Igor Sikorsky

Category: Finance

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

Comments are closed.