"Assessing the Reliability of Yield Curve as a Recession Indicator"
The Federal Reserve Bank of New York's recession probability tool, which uses the spread between the 10-year Treasury bond and three-month Treasury bill yields, suggests a 61.47% likelihood of a recession by or before January 2025. While not infallible, this leading indicator has a strong track record, with every recession since World War II being preceded by a yield-curve inversion. If accurate, a recession in 2024 could lead to a significant stock market pullback, but historical data shows that economic downturns and stock market corrections are typically short-lived events, ultimately offering opportunities for patient investors.