The attached note looks at the outlook for the US economy, particularly the risk of recession given the flattening US yield curve.

The key points are as follows:

  • If you are worried about a major bear market, the US economy is the key to watch.
  • While traditional measures of the US yield curve have flattened sending warning signs about future growth, it has given false signals in the past, is still positive and other versions of the yield curve point to rising growth.
  • Moreover, apart from very low unemployment, other US indicators still show little sign of the sort of excesses that precede major economic downturns, profit slumps and major bear markets.

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