Importantly, at the end of last week, the inverted spread between the 2- and 10-year US Treasury yields, considered a classic recession indicator, is nearly back to normal.
In addition, the 10-year yield was less than 2 basis points below the 2-year rate, another positive.
An inverted curve has been the harbinger of most recession in the U.S. since World War II.
The end of the inversion does not necessarily mean we are out of the woods yet.
However, while the yield curve can normalize before recessions, as the market starts to price in rate cuts to battle an economic slowdown, recessions generally need a trigger such as a crisis or significant policy error.
Chances of a US recession is narrowing.
