Yield Curve's Predictive Power in Question as Economic Growth Continues

The inverted yield curve, a reliable recession indicator where short-term Treasury yields exceed long-term ones, is showing signs of losing its predictive power. Despite being inverted for a record duration, no major economic slowdown has occurred. U.S. employment remains strong, and economic growth is expected to improve. If a recession doesn’t happen soon, the yield curve’s credibility as a recession predictor could be damaged, highlighting how the Covid-19 pandemic has disrupted traditional market assumptions.