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Some dull people think fixed income is boring. That’s because they don’t know how to listen when yield curves talk. This is my nerdish attempt to get more people interested in the wonderful world of fixed income. The following are only some of the messages the curves are delivering right now.

Yields are telling us the US economy will slow, if not shrink in the period ahead. The spread between 10- and two-year US bond yields is negative. This is the “inverted yield curve” recession alarm of the US economy. Not all, but most recessions in the US were preceded by the yield curve inverting. All six of the most recent were. The bond market is betting that the US Federal Reserve will have to compress demand to get inflation lower. To the extent that US weakness is a problem for global growth, we should worry. ..

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