Historically, an inverted yield curve has been viewed as an indicator of a pending economic recession; hence the inversion of the yield curve might be perceived as a leading indicator.
Once the yield curve is inverted, it may be several months before we see GPD contracting; and it is not guaranteed that we will see a sharp drop in GDP.
First pane: You can see the development of GDP and the associated development of the Dow Jones Index (log-scale). The area below you shows the US 10-year/2-year yield (bubbles indicate a yield curve inversion). As you can see, it might be some time before we see a GDP contraction after the yield curve inverts.
The last area shows the core CPI that drove the Fed and expected higher dot plot medians in December. Nonetheless, recent data suggests that the core CPI may have peaked (to be confirmed).
Once the yield curve is inverted, it may be several months before we see GPD contracting; and it is not guaranteed that we will see a sharp drop in GDP.
First pane: You can see the development of GDP and the associated development of the Dow Jones Index (log-scale). The area below you shows the US 10-year/2-year yield (bubbles indicate a yield curve inversion). As you can see, it might be some time before we see a GDP contraction after the yield curve inverts.
The last area shows the core CPI that drove the Fed and expected higher dot plot medians in December. Nonetheless, recent data suggests that the core CPI may have peaked (to be confirmed).