Hedgeye CEO Warns Flattening Yield Curve Signals Looming Economic Slowdown and Fed Policy Error

During a recent broadcast of The Macro Show, Hedgeye CEO Keith McCullough warned that the flattening yield curve signals an incoming economic slowdown and increases the risk of a policy error by the Federal Reserve.
While third-quarter U.S. gross domestic product growth continues to run between 3.5% and 4%, McCullough noted that the rapidly shifting yield curve indicates economic momentum is poised to roll over. Because short-term yields driven by Federal Reserve policy are rising faster than long-term yields, the central bank risks tightening aggressively into an already slowing economy.
McCullough expects the Fed will ultimately be forced into a cycle of panic rate cuts, drawing parallels to the economic rhythm and fractal patterns seen leading up to 2008.