Fed Hikes May Create Depressed, Not Inverted Yield Curve, Says Purves

The video discusses the relationship between hiking interest rates and recessions, emphasizing the historical pattern of yield curve inversions preceding recessions. It highlights the unique current market conditions due to extraordinary Fed policies and explores the concept of normalization and its impact on the yield curve. The discussion also covers the term premium and its role in shaping the yield curve, suggesting that future hikes may lead to a depressed but not negative yield curve.

In what ways might the current economic situation differ from past recessions?

What implications does a depressed yield curve have for future economic conditions?