The US yield curve shifted again on Wednesday, with two-year Treasury yields dropping below 10-year yields to reverse the previous inversion. An inverted yield curve (when short rates are higher than long-dated yields) is seen by some as a prelude to recession.

But the gap between the yield on the two-year and 10-year issues may not be the best economic predictor. Chip Dickson, the Lehman Brothers strategist, has analysed the various yield measures dating back to 1970. He found the best predictor of a recession was the relationship between three-month Treasury yields and five or 10-year Treasury yields. At no point in recent weeks has that relationship inverted.