2019 ROI First Quarter Edition 2019 - HIS Capital Group | Page 9

The strength in households’ and corporations’ balance sheets disguises some potential worrisome risks.
The yield curve is one of the “appointed” risks. When measured by the 10-year less the 2-year yield, the yield
curve has been close to inverting, a signal that has always preceded previous recessions.
The predictor is not completely accurate. It has predicted 11 of the past 5 recession. And the lead time from a
prolonged inversion is at least 11 months.
The bottom-line from this discussion is that a recession is at least over a year away, and that’s if the yield curve
were to invert for a prolonged period today (which it hasn’t!).
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