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The “yield curve” points to a looming American recession—but is it a false signal?

The financial indicator is fabled but now fallible 

By Paul Wallace  

The US Federal Reserve building in Washington. Photo: Sachs Ron/CNP/ABACA/ABACA/PA Images

As prospects for the global economy darken the United States has remained a beacon of growth, helped by Donald Trump’s tax cuts. But a shadow is creeping over that light. The yield curve, a financial indicator with a reputation for predicting previous American recessions, is in the danger zone. Just how worried should we be?

The yield curve shows interest rates across the range of maturities—the periods over which money is borrowed—from short-term such as three months to…

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