Is the Term Spread Still Speaking to Policymakers? Some International Evidence
Long-term interest rates are usually higher than short-term interest rates; thus, the difference between the two rates, the term spread, is usually positive. Over the past 20 years, for most developed countries, a negative term spread tended to precede a recession approximately three quarters later. The United States, however, has recently observed a low (sometimes negative) term premium with no recession.
follow @stlouisfed