The Powell spread is looking recessionary again
We have previously written about the “Powell spread.” The Fed chairman’s preferred recession indicator, and a measure of investors’ expectations, it compares the yield on a three-month Treasury bill and its implied yield in 18 months’ time.
As Powell said a year ago, “if it's inverted, that means the Fed's going to cut, which means the economy is weak."
Our chart tracks the Powell spread using ICAP Forward rates. Recession watchers will note that after easing earlier in 2023, it’s now at its most inverted in at least two decades.