When the Fed started hiking, Chair Powell told us that the front end of the curve had “100% of the explanatory power of the yield curve”

His view was that “if it's inverted, that means the Fed's going to cut, which means the economy is weak”

Well, the near-term forward spread, the Fed's favourite metric for gauging recession, has plummeted by 450 basis points since Chair Powell told us that

Either the Fed no longer believes in the predictive power of the front end of the forward curve, or it is telling us the Fed knows a recession is coming

The question now is whether the Fed is actually going to cut as the curve tells us it normally would