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With the Atlanta Fed’s GDPNow-cast for Q3 at 2.4% (as of September 30), the US economy may be coming out of the technical recession that started in Q1. But in the view of economists at Rabobank, the Fed’s Volcker-esque hiking cycle and the inverted yield curve point to an NBER-approved recession next year.
“After the technical recession in the first half of this year, the Fed’s Volcker-esque hiking cycle and the inverted yield curve point to an official recession next year. Both recessions are linked to negative supply shocks, elevated inflation, and the Fed’s policy response.”
“The current inversion of the yield curve indicates that the probability of the second recession is 70%.”