Of all the indicators analysts watch to guage where we are in the economic and market cycle, the bond market - and more specifically the shape of the yield curve - gets it right more often than any other.
The Federal Reserve Bank of San Francisco recently noted "Every recession in the last 60 years was preceded by a negative term spread, that is, an inverted yield curve." The current shape of the yield curve is telling us what we already know: that we are not at the end of the cycle but are getting closer. The cycle likely still has room to run.
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