Since the beginning of 2018, yields on US Treasuries of various durations have crept upward, substantially flattening the yield curve in the process. As the yield curve approaches the point of inversion, equity market volatility has also risen, in part due to the historical significance of the yield curve as a signal of a coming recession. But with a strong and growing US economy, is the flat yield curve still an adequate warning sign today? Or is this just noise in the system?
In this episode of The Flip Side podcast, Jeff Meli, Head of Research, sits down with Michael Gapen, Chief US Economist, to explain what’s happening and debate whether the yield curve remains a relevant indicator of a recession for investors. They review the historical context and role of the yield curve in recessions past, and how this time around may – or may not – be different.
Authorised clients of Barclays Investment Bank can log in to Barclays Live to access related reports entitled How I learned to stop worrying and love higher rates and Proceed with caution.
This podcast series features lively debates between Barclays’ Research analysts on important topics facing economies and businesses around the globe.
Q4 Global Outlook: The US, and then the rest
Barclays Research remains positive on equities as the US economy surges ahead. Our analysts believe that neither global trade sanctions nor potential contagion from emerging markets are likely to upset this growth trajectory.