The media are muck raking again, as the Fed’s favorite “recession indicator” flashes (bullshit, MSM)

This is not to say that I don’t agree that a recession is coming. I do. But in 2023-2024 when the media were bear-horning about a coming recession due to inverted yield curves I called bullshit, and b/s it was.

As parroted repeatedly, it is not the inversion that usually brings the “bust” side of the boom/bust cycle. A flattening to inversion runs with a boom. It is the subsequent steeping that gets ya. This was most recently illustrated in yesterday’s post on Musk and the bond market. Yield Curve chart = historical fact.

But OMG! Head for the hills! Batten down the hatches! Find a Unibomber shack, stock it with guns and ammo! The 10yr-3mo yield curve ticked to inversion today! Like, barely.

You can click the chart to get the full article and the [not at all] alarming news.

Ah folks, first of all as noted above, an inversion is not a recession signal (Fed spin or not). Secondly, the 10yr-3mo curve, which was tardy in joining the already steepening 10yr-2yr, is merely in consolidation of its up (steepening) trend. If indeed the media were right that a meaningful inversion (as opposed to a normal downward consolidation) is in play, it would probably be good economic news, not bad. But an inversion is not in play. A steepener is in force until the trend breaks.

You can’t make this stuff up. I guess I am cranky because of my surgery tomorrow. I should be calmly reflective, but instead I am here again seeing it as my duty to critique the media. Come on MSM, you’re better than that! Or at least you’re really good at harvesting the public’s eyeballs, eh?

The steepening trends are in place for 10-2yr and the 10-3mo. If anything, the downward consolidations can be viewed as a bit of a relief in the steepeners. The green lines represent the respective inversion/dis-inversion points. But it’s the trends that matter, and they are up/steepening pending the Q4, 2024 lows.

See you Friday from a hospital bed or next week.

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