Part 4/8:
To understand why a recession has not yet appeared, we must examine the "hot zone" of yield curves that have historically preceded recessions. Each previous recession commenced at different yield curve levels: 0.1% in 1989 and 2020, 0.5% in 2001, and 1% in 2007. Currently, the yield curve is within this hot zone, yet it has not conclusively signaled an incoming recession.
If we hypothesize that the yield curve may require a steeper climb before a recession is confirmed, future yield curve steepening could extend into early 2025 before a downturn emerges, challenging the yield curve's reputation as a recessionary forecaster.