A Recession May Be Coming. Morgan Stanley Looks at the Odds.

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Photograph by Mark Wilson/Getty Imagess

Whether or not a recession is coming has been on the minds of many Americans following last month’s so-called yield-curve inversion.

Morgan Stanley ’s full model of the probability of a recession points to only an 11.4% chance of one over the next 12 months. But if you extract only financial variables, like the change in the yield curve, that shoots up to 34%. (Yields on shorter-dated debt rose above those on longer-dated borrowings, a shift that in the past has signaled a recession is on the way.)