I really can't add much to Jim Hamilton's wonderfully clear exposition of the yield curve, the expectations hypothesis of the term structure, and what it all might mean in the current economic environment beyond advising you to go read it. Extra cool points are awarded for the link to the "recession predictor" at Political Calculations, an interactive program based on research by the Federal Reserve Board's Jonathon Wright that allows you to plug in relevant information about the Treasury yield curve and receive, free-of-charge, an estimate of the probability of recession arriving within in a year. It's been around for awhile, so I somehow missed it the first time around. To atone, you will henceforth find the path to the recession predictor in the "Useful Links" list of this weblog.