Apart from the one-time false positive, the yield curve signal has another weakness fuzzy timing.

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Normally the yield curve is positive because investors demand higher yields to compensate for the risk that inflation might pick up.

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But on May 15th the short-term yield curve turned positive for the first time in 16 months, usually an indicator that the market thinks enough easing has taken place.

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Yield curve is positive.

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Assume Alan Greenspan is through tightening and the yield curve turns more positive.

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