This Yield Curve Inversion Is ‘Different,’ Goldman Sachs Says
While the deeply inverted yield curve has stoked anxiety among investors about the prospect of a recession, Goldman Sachs Group Inc. has a different message: stop worrying about it.
“We don’t share the widespread concern about yield curve inversion,” Jan Hatzius, the bank’s chief economist wrote in a note Monday, cutting his assessment of the probability of a recession to 20% from 25%, following a lower-than-expected inflation report last week.
Hatzius stands in opposition to most investors who point out that the curve inversion has an almost impeccable track record of foretelling economic downturns. The three-month T-bills yielded more than 10-year notes before each of the past seven US recessions. Currently, the short-term yields are more than 150 basis points above the longer-maturity notes, close to the biggest inversion in four decades.