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Other than in the most abstract way, there aren’t a lot of people talking about a coming U.S. recession. Sure, some say the Federal Reserve needs to raise interest rates now so it can lower them and have an impact when a recession hits, but that’s about the extent of the discussion. But I’m starting to see elements that could coalesce and show that a recession may not be too far away. First - and perhaps foremost - there’s the Fed. Policy makers are boosting rates, have hinted at an inclination to be more aggressive, and are reducing the central bank’s balance sheet, which on the margin puts upward pressure on bond yields purely from a supply perspective. The yield curve is responding accordingly by flattening. I came across a San Francisco Fed Economic Letter outlining the value of the yield curve as an economic forecaster and how an inversion has preceded every recession in the last 60 years. Although the authors agree with the notion that the current flattening may not mean what ...

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