DB on their US Recession call (this in summary), citing, amongst other indications:

• the aggressive rate hikes, curve inversions

to

• lead to a US recession with the appropriate lag and not a soft landing
• just about every leading indicator is now pointing to a US recession by the end of the year

More:

• A key pointer was the 2s10s inversion back in March 2022. For us that was the final signal that the long countdown clock to the recession had begun.
• given how long the 2s10s has been inverted now, this has to have already impacted future activity. The yield curve predicts lending standards and animal spirits. The longer short-term rates are high relative to the rest of the curve the more money flows into safe assets at the short-end rather than economy-growing risky assets/lending/investments further out the curve.

This article was written by Eamonn Sheridan at www.forexlive.com.

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