5 Recession Risk Factors That Investors Should Be Watching

5 Recession Risk Factors That Investors Should Be Watching
The S&P Global logo is displayed on its offices in the financial district in New York City, on Dec. 13, 2018. Brendan McDermid/Reuters
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S&P 500has plenty of bullish momentum heading into the end of the year, and the latest jobs report from the Labor Department highlighted just how strongly the economy is rebounding now that COVID-19 vaccinations are widespread.

Yet economic recessions always catch investors off guard, so Brad McMillan, Chief Investment Officer for Commonwealth Financial Network, regularly monitors a handful of recession risk factors to gauge U.S. economic risk.

Yield Curve & Valuation

The first risk factor McMillan is watching is the yield curve between 10-year Treasuries and three-month Treasuries. That yield curve steepened in October for the third consecutive month and has headed back toward historical norms, but McMillan said rising yields can also pose a threat to equity valuations.