With a December rate-hike baked into the cake (odds as close to 100% as possible), the hotter-than-expected PPI print has sparked notable outperformance in the long-end (amid Fed-driven slowdown fears) sending the yield curve to new cycle flats - flattest since 2007...

 

The last two times the yield curve was this flat, the US economy was in recession...

 

As a reminder, it took The Fed driving rates up to 5.25% before financial conditions finally snapped tighter...

 

But The Fed has only around 100bps of tightening space before the curve is inverted this time.