Growth, labour, credit, curve, housing, consumer. Not a probability.
Realised inflation, expectations (market & survey), wages, energy.
Credit spreads, volatility, equities, conditions, rates, dollar.
Weighted blend of the three. Not equivalent to recession probability.
Current regime
Growth-related stress is rising, without broad confirmation from credit and labour indicators.
Recession stress is moderate at 50/100 (up 5 pts over 1 month).
The score is mainly driven by credit / financial (50) and yield curve / rates (51).
4 of 7 major recession categories show stress (Watch or worse; 0 Elevated or Severe), and 1 deteriorated over ~3 months. This is a breadth count, not a probability.
Inflation stress is in the watch range at 63 (broadly unchanged over 1M), led by energy (81) and survey expectations (75). Pattern resembles an energy / inflation impulse (oil, inflation expectations and yields rising together). This mainly raises inflation stress; it becomes a growth risk if it persists and squeezes real incomes.
Financial market stress is in the watch range at 52 (up 17 pts over 1M); highest readings in rates / term premium (69) and credit spreads (61).
This is an analytical summary of current conditions generated from the indicators shown. It is not a forecast and does not state that a recession will or will not occur.
Data quality
Treasury curve
30Y Treasury Stress →Category signals
- Credit Stress50Watch
- Labor Stress42Normal
- Manufacturing / Activity24Normal
- Housing66Watch
- Consumer60Watch
- Equities49Normal
- Yield Curve51Watch
- Inflation63Watch
Category stress 0–100. Bands: <50 Normal · 50–75 Watch · 75–90 Elevated · ≥90 Severe.
Signal confluence
- Labor↓ 3 (3M)Normal
- Manufacturing / Activity↓ 11 (3M)Normal
- Credit↑ 16 (3M)Watch
- Housing↑ 3 (3M)Watch
- Yield curve↓ 5 (3M)Watch
- Consumer↑ 1 (3M)Watch
- Equities↑ 3 (3M)Normal
0 at Elevated/Severe; 1 deteriorated by >5 pts over 3M. A breadth count — not a probability.
Stress score history
Weekly, recomputed with data dated up to each point.
What changed and why it matters
- Recession Stress: 1M +5 pts, 3M +3 pts.
- Equity / Market: +17 pts over 1M (now 49).
- Credit / Financial: +16 pts over 1M (now 50).
- Deteriorating over ~3M: CCC & lower OAS, US High Yield OAS, 30Y fixed mortgage rate.
- Improving over ~3M: Bank lending standards (SLOOS, C&I), 10Y–3M deepest inversion (trailing 24M), Housing starts.
Why it matters
- Credit / Financial: Credit spreads, financial conditions and bank lending standards capture funding stress that can amplify a slowdown - something Treasury yields alone do not show.
- Yield Curve / Rates: Curve inversions have preceded most post-war US recessions with long, variable lags; markets pricing rapid easing often reflects expected weakness.
What to watch next
| Indicator | Current | Next band | Threshold |
|---|---|---|---|
| US High Yield OAS Approaching next band and deteriorating over 3M | 3.23% | Elevated | Spread level: 3.23 |
| Investment Grade OAS Approaching next band and deteriorating over 3M | 0.84% | Watch | Spread level: 0.84 |
| BBB corporate OAS Approaching next band and deteriorating over 3M | 1.05% | Watch | Spread level: 1.06 |
| 10Y yield: absolute 3M move (rates volatility proxy) Approaching next band and deteriorating over 3M | 53 bps | Elevated | Absolute 3M change: 56.00 |
| Chicago Fed Adjusted NFCI Approaching next band and deteriorating over 3M | -0.49 | Watch | Level: -0.39 |
| VIX Approaching next band | 16.5 | Watch | Level: 17.56 |
Evidence supporting recession stress
- Brent crude 126.55 (yoy % change (inflation impulse): stress 100; 3M +52.3%)
- CCC & lower OAS 12.78% (spread level percentile: stress 100; 3M +308 bps)
- UMich consumer sentiment 51.7 (level percentile: stress 99; 3M +6.9)
- WTI crude 101.91 (yoy % change (inflation impulse): stress 94; 3M +26.2%)
- Personal saving rate 4.1% (level percentile: stress 92; 3M −0.3 pp)
- New home months' supply 8.5 (level percentile: stress 88; 3M −0.7)
Evidence contradicting it
- Philadelphia Fed manufacturing activity 20.9 (3m average level: stress 0; 3M −20.5)
- Baa – 10Y Treasury spread 1.44% (spread level percentile: stress 2; 3M −15 bps)
- Atlanta Fed GDPNow 3.6% (nowcast level: stress 7; 3M +2.1 pp)
- Empire State manufacturing conditions 25.5 (3m average level: stress 14; 3M +9.9)
- 2Y–3M spread (expected policy path) +0.49 pp (spread level: stress 17; 3M +17 bps)
- Initial jobless claims 199,000 (yoy % change, 4-week average: stress 19; 3M −4.8%)
What would confirm the signal
- Sahm Rule rising a further 0.50 pp to its 0.50 threshold (currently 0.00).
- US High Yield OAS: spread level rises above 3.23 (Elevated band).
- Core PCE inflation, YoY: yoy level vs. 2% target rises above 3.20 (Elevated band).
- Quits rate (JOLTS): level falls below 1.80 (Elevated band).
- 10Y term premium (Kim-Wright): level rises above 1.33 (Elevated band).
- Credit confirmation: US High Yield OAS rises above 3.23.
What would invalidate it
- Brent crude: yoy % change (inflation impulse) falls back below 10.00 (back to Normal).
- CCC & lower OAS: spread level falls back below 9.08 (back to Normal).
- UMich consumer sentiment: level recovers above 88.30 (back to Normal).
- WTI crude: yoy % change (inflation impulse) falls back below 10.00 (back to Normal).
Energy inflation stress
78 / 100Pattern resembles an energy / inflation impulse (oil, inflation expectations and yields rising together). This mainly raises inflation stress; it becomes a growth risk if it persists and squeezes real incomes.
- ● Oil rising (3M > +10%)+26.2%
- ● 5Y breakevens rising (3M > +10 bps)+10 bps
- ● 10Y yield rising (3M > +15 bps)+53 bps
- ○ Oil falling (3M < -10%)+26.2%
- ○ Unemployment rising (3M > +0.2pp)0.0pp
- ● Credit spreads widening (3M > +50 bps)+52 bps
- ○ 2Y yield falling (3M < -25 bps)+61 bps