The Fed’s quantitative easing program is destroying a typically useful early indicator of recessions, according to Paper Economy.
One of the tools the Fed is using is the purchase of government bonds at different points along the yield curve.
Previously, the Federal Reserve Bank of New York utilized the spread between the 10-year and 3-year bonds on the curve to predict recessions. But that may no longer work due to the distortions created by QE.
All the while, the ECRI weekly leading indicator is showing a recession or slowdown is imminent.
Check out this chart from Paper Economy, and read their full breakdown here >
Photo: Paper Economy