[MRM]

The inverted yield curve doesn’t always predict a recession - it’s inverted a couple of times in the last few years - but every recession in the modern era has been preceded by an inverse yield curve.

It’s going to be hard, if not impossible for the Fed to raise rates without triggering a recession. I don’t think the Fed has ever achieved a “soft landing” ever before. The Fed has to keep rates higher than inflation for a bit after inflation recedes in order for it to stick. So there has to be a time when rates are too high. They’d have to guess perfectly to get out of it without triggering a recession.

But on the other hand, the moment inflation looks like it’s been tamed and rates are still climbing, that’s the time to load up on bonds and kiss the stock market goodby. I still remember being a law clerk with no money walking by a brokerage office with the ticker flashing interest rates in the window. The 30 year Treasury Bond was 9% and falling. I knew I was unlikely to see a deal like that again.