This is the danger of fixating on the economic rearview mirror. And few things are more rearview than hiring and layoffs.
Leading financial indicators such as yield curves and oil futures are painting a very clear picture and it's not good.
Care to elaborate?
Oil futures have also been down which is similar.
The countervailing element here is that the economy is slowing down from a very fast clip: unemployment is historically low, job losses are pretty subsector-specific and tech employees are quickly finding new jobs elsewhere in the economy, the financial sector is healthy, and consumers aren't seeing the kind of destruction of wealth we saw back in '08. As a result, I'm still cautiously optimistic -- for whatever my opinion's worth -- that the Fed can manage a soft landing, though the ambiguous nature of current economic signals means that monetary over- or under-shooting is quite possible, leading to either a hard recessionary landing or continued inflation (noting that cost-push inflation due to factors such as COVID and the Russian war in Ukraine are not really manageable through monetary mechanisms, so hang-on inflation is likely to continue to eat away at economic performance).
No, yield curve inversions have preceded each of the last 8 recessions (9 if you count 20-year to 3-month inversion), they've also occurred multiple times in that period without recessions before the inversion resolved, so they are not a reliable indicator of recessions (their absence is, by that history, a reliable indicator of not-recession, though).
If you accept Harvey's definition, then the major misses were the minor 10-2 inversion in the summer of 1998 (which prompted a quick round of Fed cuts that may have avoided a mild recession); the persistent inversion of 2000, which correctly predicted an economic slowdown but not a recession (in the US, anyway); the February 2006 inversion, which was in response to Fed attempts to cool down the housing market, which bit us a few years later; and the summer 2019 inversion, which I think was a true miss, though COVID pretty much upended any "normal" economic cycle, so it's possible that absent pandemic-era stimulus we might have had a mild recession. (Src: https://fred.stlouisfed.org/graph/fredgraph.png?g=YAvs and https://fred.stlouisfed.org/graph/fredgraph.png?g=YAvv)
As you say, it's an imperfect metric by any light, even though I buy into the less-strict traditional prediction model, so take it a bit more seriously when the lights start flashing. Regardless, for what my opinion's worth (which ain't much), I think this is looking more like '98 at best and '01 at worst, at least as long as the Fed doesn't overshoot and slam us into the tarmac.
Inversion means that bondholders value short terms more than long terms. That happens when the future is uncertain. If you think rates will go up substantially in a couple of months it's better to buy the short term bond and then later roll to the long term bond then to buy and hold a long term bond which will increase in yield as the prime increases. (Increasing yield is bad for bond holders).
It's not clear to me. Can you please explain?