"The yield curve is inverted now, but there are other important indicators which at this time fail to confirm the yield curve signal. Market-based indicators suggest the economy and financial markets are still in reasonably healthy condition.
The most significant development is the extraordinarily low level of real and nominal interest rates in the US and in most major developed economies. I believe that very low interest rates are not necessarily a sign of an impending recession, but instead likely reflect widespread risk aversion among market participants.
...yield curve inversions have preceded every recession since the 1950s. But there is one other variable which has also preceded every recession, and that is a real Fed funds rate that is high and rising (e.g., at least 3-4%). Currently, the real funds rate is barely positive, which means that monetary policy is far from being so tight as to strangle the economy or to starve the market of much-needed liquidity.
...Risk aversion appears to be significant, but it's not necessarily something to worry about. A risk averse market is less prone to disappointments, and more able to withstand adverse shocks."
(Risk aversion is the big story, not the yield curve dated 08/28/2019 by Scott Grannis, Chief Economist from 1979-2007 at Western Asset Management)
Full article can be found here: http://scottgrannis.blogspot.com/2019/08/risk-aversion-is-big-story-not-yield.html