Is the yield curve pointing to recession?

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What yield curves and credit markets reveal about future growth

A tightening of US monetary policy has resulted in the US yield curve becoming flatter. With the Federal Reserve (Fed) expected to continue its policy of gradual rate increases over the coming quarters, a key measure of the yield curve slope, the difference between the ten-year and two-year US treasury yields, has recently reached its smallest since July 2007. In the following, we consider what we can learn from the yield curve about the outlook for future economic activity.