The US Treasury yield curve is flattening again, with parts finally in 2016 surpassing the bearishness exhibited to start 2015. The mainstream is just now starting to notice likely because unlike last year there are no longer credible excuses to simply wish it away. “Transitory” is not a word you find much anymore, replaced instead by reluctant and forced acknowledgement that there is real economic peril here.

Bearishness in the yield curve is not something new, however, only the notice of it. While risks to the economy are part of this shift in commentary, the Federal Reserve’s haplessness is as well.

“The yield curve itself signals that things are not good looking into the future and talking about recession risk,” Major said in an interview on Bloomberg Television’s “On the Move” with Guy Johnson. “The market is now ready for a long, long time with very low rates and it’s been painful because people have been expecting the Fed to do what it said it was going to do. The Fed really wants to hike rates but can’t.”

Flattening has been the operative condition going all the way back to late 2013; in the 5s10s dating to November 20 that year; in the 2s10s to December 31. That means that credit markets, echoing bearishness in funding, read the economic risks of QE3’s potential completion far differently than economists and policymakers. The latter group chose specifically to ignore markets in order to embrace the unemployment rate and Establishment Survey, while markets never were fooled by the labor statistics no matter how wildly positive they seemed to get.

As the BLS took to calculating “the best jobs market in decades” with mainstream extrapolations to nothing but sunshine, credit and funding were singularly unimpressed with real money betting on vastly overstated economic expectations.

The struggle over competing views was settled last year as credit and funding (the “rising dollar”) were proven correct. There was no completed recovery, instead only great economic risk as the slowdown turned toward and into contraction. This sudden interest in the yield curve misses the point, focusing on unsuited precision. In other words, having showed that past bearishness was correct in being bearish, those late to the process now want to use the yield curve as a hard signal for recession as if that cyclical declaration was all that matters(ed).