Latest / The Macro Memo with Fexingo: Daily Conversations on Inflation, GDP, and Federal Reserve Policy
Why the Yield Curve Normalization Is Different This Time
The yield curve has re-steepened after one of the longest inversions in history, but Lucas and Luna break down why this normalization might not signal a recession. With the 10-year Treasury at 4.49% and the 2-year at 4.23%, the spread has turned positive. Yet job creation slowed to just 57,000 in June, and the labor force participation rate hit a 50-year low outside of COVID. Lucas connects the dots: the Fed at 3.63%, sticky core PCE at 2.9%, and a bond market that's pricing in a different risk—not recession, but stagflation-lite. Luna questions whether the inverted curve ever predicted…
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