A down shift in the rate hiking pace by the Bank of Canada this week just stoked that speculation. And even in the face of some spooky corporate health warnings, stock markets fed off Fed 'pivot' talk yet again and have been chomping at the bit for a fortnight. When that 2-10 yield curve inverted in April for the first time in almost three years - shortly after the Fed's first hike - recession angst took a firm grip. Fed economists argued vociferously that the 2-10 yield curve was not reliable and insisted a 'soft landing' was still possible if more accurate shorter-term yield curve spreads that remained positive were used instead. An elongated measure of the yield curve between 3 months and 10 years - used by the New York Fed in its recession probability models - dropped into negative territory for the first time since the pandemic hit.

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