W3Schools

This is the real reason why the U.S. economy isn’t in recession danger now

The yield curve is first and foremost predicting the outlook for Fed policy rather than the next recession. My research has confirmed this conclusion, as does a recent Fed study.

In my recent book, Predicting the Markets, I wrote: “The Yield Curve Model is based on investors’ expectations of how the Fed will respond to inflation. It is more practical for predicting interest rates than is the Inflation Premium Model. It makes sense that the federal-funds rate depends mostly on the Fed’s inflation outlook, and that all the other yields to the right of this rate on the yield curve are determined by investors’ expectations for the Fed policy cycle.

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