It looks like a virus is going to help retain a commonly believed indicator of a recession.
As per this report of exactly a year ago, the US bond yield curve had inverted. Basically that meant that investors preferred to invest money with a 10 year maturity (a longer term bond) instead of a shorter term bond (say, a 3 month one). Investors would do that when they find that in the short term the uncertainties and risks are too high. So longer term investment in an instrument considered universally safe, such as US treasury, is better.
In each of the last 11 out of 11 instances of yield curve inversion, a recession has followed a few months to a year after that. The corona virus battered world is indeed staring at a recession now, exactly a year after the yield curve inversion. Several years later, would we say that this recession was indeed the 12 out of 12 success for the yield curve recession indicator ? We know that correlation does not imply causation but in this truly black swan case of the virus, even counting the correlation as the 12th success seems unwarranted. There is no common cause either for the inverted yield curve and the COVID 19 pandemic.
