What is recession probability?

Recession probability is a weighted score based on key leading economic indicators: the yield curve (10Y-2Y spread), PMI, high yield credit spreads, unemployment trend, leading economic index and oil price shocks. A score above 70% historically precedes recessions within 12 months.

What does the yield curve say about recession risk?

The 10-year minus 2-year yield spread (yield curve) is one of the most reliable recession predictors. When the curve inverts (goes negative), a recession typically follows within 12-18 months. Currently the curve is at +0.4%, which is positive but flattening.

What is the PMI recession indicator?

The Purchasing Managers Index (PMI) measures manufacturing and services activity. A PMI below 50 indicates contraction. The current Global PMI of 51.4 — just below the 50 threshold, signalling mild economic weakness.

Are We In A Recession? Live Recession Tracker 2026

Q: Are we in a recession in 2026?

Based on 6 key economic indicators as of March 2026, the recession probability is 42%. The economy is in late-cycle territory. The PMI is at 51.4, the LEI is declining, and an oil price shock from the Hormuz crisis is adding pressure. However, the yield curve remains positive and credit spreads are not yet at distress levels.

Q: Is a recession coming in 2026?

As of March 2026, recession probability is 54% — elevated but not yet in high-risk territory. The Hormuz oil price shock is the biggest near-term risk. If oil stays above $100 and PMI falls further below 48, recession risk could escalate to 60%+.

Are We In A Recession?

Not yet — but risk is elevated. 3 of 6 indicators are flashing warning signs — oil shock intensifying — US Navy blockade of Hormuz. The yield curve remains positive and labour markets are holding.

⚠️ Economic phase: Mid-late cycle — ceasefire relief

Signycle Recession Score · 6 indicators · Manually updated weekly

6 Key Recession Indicators

Indicator	Current Value	Risk Score	Status
🔄 Yield Curve (10Y–2Y) Negative = recession warning · Weight: 25%	+0.4%	55 / 100	⚠️ Flattening
🏭 Global PMI Below 50 = contraction · Weight: 20%	51.4	55 / 100	⚠️ Slowing
📊 HY Credit Spread Above 6% = stress · Weight: 20%	3.2%	20 / 100	✅ Normal
👷 Unemployment Trend Rising >0.5pp = recession · Weight: 15%	+0.1pp	20 / 100	✅ Stable
📉 Leading Econ. Index (LEI) Below –0.5% MoM = warning · Weight: 10%	–0.3% MoM	60 / 100	🔴 Declining
🛢️ Oil Price Shock Above $100/bbl = demand shock · Weight: 10%	$93.0/bbl	75 / 100	⚠️ Ceasefire — easing

Historical Recession Probability Comparison

2008

92% GFC 2008

2020

88% COVID-19

2022

58% Energy crisis

2023

42% Banking stress

2024

28% Soft landing

NOW

52% Hormuz shock

How to Position for a Recession

A rising recession probability changes the Signycle signal framework. Here is how the indicators interact with cyclical stock positioning:

🔴 Avoid / Reduce

✗ Oil stocks — Brent at SELL threshold
✗ Copper miners — SELL zone
✗ Highly levered industrials
✗ Tankers at peak rates

🟢 Watch / Accumulate

✓ Defence stocks — structural demand
✓ Fertilizer at low prices (Yara)
✓ Cash and short duration bonds
✓ Waiting for BDI to hit BUY zone

Not financial advice. Signycle is a macro signal tool — not an investment advisor.

The SO WHAT

What does a 54% recession probability mean for your portfolio?

🔴 Reduce exposure

Oil stocks — Brent at SELL
Copper miners — above threshold
Highly levered industrials
Tankers at peak rates

🟢 Structural holds

Defence (NATO rearmament)
Fertilizer at neutral prices
Cash for next cycle entry
Wait for BDI BUY signal

See the full market cycle indicator — or explore every bull and bear market since 1900.

Frequently Asked Questions

Are we in a recession in 2026?

Not yet — but risk is elevated at 54%. The economy is in late-cycle territory. The Hormuz crisis oil shock ($115.0/bbl) is the biggest near-term risk. PMI has fallen below 50 and the leading economic index is declining. However, the yield curve remains positive (+0.4%) and unemployment is stable, which are the two most reliable recession indicators — both currently point away from imminent recession.

What is the most reliable recession indicator?

The yield curve (10Y–2Y Treasury spread) has preceded every US recession since 1950 with only two false positives. When the 10-year yield falls below the 2-year yield (inversion), a recession typically follows within 12–18 months. Currently the curve is at +0.4% — positive but flattening from the inversion seen in 2022–2023.

Is a recession coming in 2026?

The recession probability of 54% means there is roughly a 1-in-2 chance of recession beginning within the next 12 months under current conditions. The key swing factor is the Hormuz crisis — if oil stays above $100 and the crisis persists for 6+ months, European growth could turn negative. If Hormuz resolves, oil falls back to $70-80 and recession probability would drop to 25-30%.

What does PMI below 50 mean?

The Purchasing Managers Index (PMI) measures whether manufacturing and services activity is expanding (above 50) or contracting (below 50). The current Global PMI of 51.4 is just barely in contraction territory. Historically, a PMI sustained below 48 for 3+ months strongly correlates with recession. We are currently at the warning threshold but have not yet breached the recession zone.

How does the Hormuz crisis affect recession risk?

The Hormuz crisis (Iran's mining of the strait in February 2026) has sent oil prices above $100/barrel. Energy price shocks are historically one of the most reliable recession triggers — the 1973 oil embargo, the 1979 Iranian revolution, and the 1990 Gulf War all preceded recessions within 12 months. The current shock adds approximately 15-20 percentage points to the recession probability score.