Inversion continues, with 10yr-3mo at same level as on 12/`6. VIX at 45. Kalshi odds on a recession at 68%, highest since trading started in August. EPU at 1203.
Near-Horizon Recession Probability: Estimate for April 2025
Using data through March.
Bill McBride/Calculated Risk on “Recession Watch”
I’m concerned about tariff policy impacting the economy. Usually fiscal, executive and trade policy decisions wouldn’t lead to an immediate recession, but these tariffs are a huge blunder. There have been other unforced errors – like cutting basic research spending – but that is more of a long-term issue.
As an aside: Imagine a tech company announcing they were going to cut spending by eliminating R&D. Their stock would plummet. That is what the U.S. has done with some of the DOGE cuts.
Nowcasts, 4/5
NY Fed nowcast down.
Business Cycle Indicators: Employment in March
Mid-March to be specific.
Has the Recession Already Started?
Even if the answer is yes, we won’t know for a long time.
What a Difference a Day Makes: The Post-Obliteration Day Yield Curve
Inversion deepens (see sky blue line vs. green line):
2 April 2025: An Event Study
Odds of a recession in 2025:
Doug Irwin: “…bigger than Smoot-Hawley”
From Bloomberg:
Further Inversion of the Treasury Yield Curve
As of close today: