Bond curve steepening confirms imminent recession

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The one thing that is worse for the growth outlook than an inverted yield curve is the sudden steepening of the same as markets realise that the downturn is imminent. They buy bonds, especially at the short-end of the curve, in anticipation of central banks pivoting dovish.

We are there in the US:

And, increasingly, Australia too:

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.