The recent performance of the US 10-year state bond yields has been a subject of concern for many investors. On February 26, the yields dropped below the three-month mark, a development that has been seen as a potential indication of a recession in the US. According to the Frankfurt Rundschau, this trend has been observed in the bond market, particularly in the tech sector, as investors’ confidence in the Trump administration’s economic policies begins to wane.
The inverse yield curve, a long-standing indicator of future economic downturn, has been a reliable predictor of recessions for the Federal Reserve. The recent market fluctuations, particularly in the tech sector, suggest that this trend may be a sign of a recession in the making.
Consumer spending, a key driver of the US economy, also appears to be slowing down. The Conference Board’s Consumer Confidence Index fell by seven points to 98.3 in February, the largest drop since August 2021. Economists surveyed by Reuters had predicted a smaller decline, with only 102.5 points anticipated.
Furthermore, the expectations of consumers regarding inflation over the next 12 months have increased, with the average inflation expectation now at 6 percent, up from 5.2 percent in January. The upcoming tariffs imposed by the Trump administration may exacerbate inflation, while the new efficiency agency DOGE’s efforts to reduce the workforce could further erode purchasing power.