Crikey! I’ve lost my mojo!” –Austin Powers
Former Fed Chair Ben Bernanke recently joined the chorus of voices casting doubt on the predictive ability of the yield curve. Yet, others such as Minneapolis Fed President Neel Kashkari, have been quite vocal about the risks of inverting the yield curve.
Whatever your views on Bernanke, Kashkari, or inverted yield curves, it would be wise to understand that the top policymakers disagree on the topic. Nobody knows how predictive the yield curve still is. Only time will tell. In the meantime, we should approach the debate with humility and understand the opposing lines of logic thoroughly.
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