Some Policymakers Fretting About An Inversion of the Yield Curve
When the FOMC raises rates late in a tightening cycle, the yield curve always flattens and the yield curveusually inverts. Inversions have always been followed by recessions. So it is understandable that some
policymakers have indicated they would become cautious, or even resist, further rate hikes if the yield curve
were to invert. We see it as close call whether or not the yield curve will invert. But recession risk increases
as the yield curve flattens and that risk will build as the FOMC moves toward neutral, and especially beyond
neutral. Here we ...
Led by former Federal Reserve Board Governor, Larry Meyer, Monetary Policy Analytics is an independent research firm focused on the macro economy, FOMC policy and interest rates. Our research is used by some of the world's largest hedge funds, fixed income asset managers, pension fund managers, currency desks, insurance companies and money center banks. The written commentary is outlined below:
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