Dr. Campbell Harvey on the Inverted Yield Curve’s Recession Signals

In his 1986 PhD thesis, Campbell Harvey identified the predictive power of the inverted yield curve through four business cycles. With curve inversion correctly foretelling three more recessions since then, investors this cycle have been anticipating an impending downturn ever since the yield curve inverted nearly two years ago. In this episode, we talk with Dr. Campbell Harvey, Professor of Finance at the Fuqua School of Business at Duke University, about the theoretical foundation connecting the inverted yield curve and recessions, whether this cycle could be different, and what it implies for Fed policy.