There is a lot of talk, or should that be a lot of noise, at the moment of recession. It has got some people very worried.
I guess some folks have good reason to be concerned. A recession could mean that the economic rebound, which many of us had expected to happen after the shock of a pandemic, could be short-lived.
If we think back to 2020, experts at the time were debating over the shape of post-pandemic recover. They included a V-shaped, U-shaped, W-shaped, and L-shaped rebound. Some had even suggested a Square-Root shaped recovery.
So, why are some experts forecasting recession now. Well, they point to the decline in bond yields for 10-year Treasuries compared to the yield on two-year notes. Generally, we would expect interest rates on those longer-term loans to be higher than 2-year Treasuries.
It stands to reason why they should be higher. If we are lending money...