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- An inverted bond-yield curve is widely regarded as the sign of an oncoming recession.
- The US Treasury curve has been inverted for quite a while now – but Goldman Sachs says things are different this time.
- Jan Hatzius, Goldman's chief economist, said "overly pessimistic" economic forecasts have put more pressure on long-term rates than is justified.
For months, investors have been bracing for a US recession, thanks in part to relentless warnings from a market-based indicator with an impeccable track record – the bond yield curve.
It's a graph that plots interest-rate returns on debt securities across maturities – and its inversion, where short-term yields top long-dated ones, is widely regarded as the signal for oncoming economic contraction. Inverted bond-yield curves have successfully predicted every US recession in the past 60 years.