The New York Federal Reserve’s recession indicator – which is used to predict the likelihood of a recession one year from now – in January increased 0.02 percentage points from the previous month. This probability is derived using the yield curve – or the spread between interest rates in 10-year Treasury bonds and 3-mont Treasury bills – which fell 0.01 percentage points from December. This occurred when yields for 10-year Treasuries and 3-month T-bills fell 0.04 and 0.03 points, respectively. While T-bill yields are mostly kept close to zero by the Fed, rates on 10-years vary more with markets. Throughout January, these yields steadily fell while the Federal Reserve began tapering of the bond-buying program, also known as quantitative easing. After the Federal Open Market Committee (FOMC) met in the end of January, it was revealed that bond-buying would be reduced by ten billion dollars in February.
NY Federal Reserve’s Recession Indicator 2014-01-01 to 2014-01-31
Wednesday, January 1, 2014
Friday, January 31, 2014