The indicator with an almost perfect record of predicting US recessions is edging towards a tipping point

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• The US yield curve is flattening, a normal scenario at a time when the US Federal Reserve is lifting interest rates.
• When the curve has turned negative in the past — where short-dated yields are higher than for longer-dates — it has almost always indicated that a recession will occur within two years.
• Macquarie Bank doesn’t expect the curve to turn negative until the end of 2019, but it says 2020 will be a “most interesting year”.