- The credit markets are showing modest signs of stress.
- The yield curve continues to narrow.
- The second GDP report had a strong headline number, but several key one-off events were responsible for the strong report.
The purpose of the Turning Points Newsletter is to look at the long-leading, leading, and coincidental indicators to determine if the economic trajectory has changed from expansion to contraction – to see if the economy has reached a “turning point.”
As regular readers know, I upped my recession probabilities to about 30% over the last few months, based on declining building permits, heightened corporate paper spreads, a tightening Fed, a flattening yield curve, and a declining equity market.
While the Fed is probably a bit more dovish now, deteriorating conditions in several credit market sectors keep my recession percentage at 30%