After their market and macro reviews for the Feb. 7-11 week, Jeff Mayberry and Samuel Lau for their Topic of the Week (17:30) take a look at flattening of the U.S. Treasury yield curve as a recessionary and economic indicator. (Jeff and Sam talk about the yield curve in prior Topics of the Week in episodes 11* (nominal and real yield curves) and 24** (bear and bull flattener and steepeners).) In their deep dive, they talk about inversions, when yields of shorter parts of the curve rise higher than yields of longer parts of the curve, resulting in negative spreads. They review the three commonly tracked yield spreads and how accurately inversion of those spreads heralded the six recessions dating back to the mid-1970s (21:20). Jeff and Sam stress that they do not currently see recessionary signals in the yield curve.
Their review of the week ended Feb. 11 was shaken up Friday by rising tension between Russia and Ukraine leading to some end-of-week market shifts (1:26). Macro coverage includes discussion of sticky inflation and how expectations grow for interest rate and QT moves by the Fed (9:19). Jeff and Sam preview a pretty busy week, including PPI and retail sales numbers, and Fed meeting minutes while hoping for a peaceful and safe Super Bowl weekend (32:00).
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