Bloomberg: “Shades of 2007 as Volatility Markets Ignore U.S. Recession Risk”

The renewed rally in U.S. equities has left volatility markets showing little concern that the good times will end any time soon. Recession models beg to differ.

Wells Fargo’s model — which draws on the spread between three-month and 10-year Treasury yields as well as economic figures — shows chances of a U.S. recession within 12 months jumped in December and climbed to just above 40 percent in January.