Economists often look to the US Treasury bond market for clues about when a recession might come. Specifically, they examine the so-called yield curve. When it’s “inverted,” as it has been since about mid-2022, that almost always means a US recession is looming. But by mid-2023, the curve began to “dis-invert” – or steepen in industry parlance — in a way that raised the question of whether the US had managed to dodge a recession or whether one was about to start.

Things are definitely on the move, with rapid shifts in expectations for interest rates. That’s on display with shifts in the yield curve — the graph plotting the level of interest rates on federal government bonds maturing anywhere from one month to 30 years. On Oct. 5 and Oct 12, yields on longer-dated bonds pushed sharply higher on expectations that the US’s economy’s strength means the Fed will hold rates “higher for longer.”

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