Pointing towards recession

In my long experience in economic analysis and forecasting, the yield curve (10 year government stock rate minus the official discount rate) has proved a useful indicator of likely trend in economic activity for the next year or two ahead.  It doesn't always tell you how deep the recession will be, because other factors play a role.  For example the yield curve went more negative in 2001 than it did in 2007/8, but the recession in 2008/9 was deeper than in 2001/2.  That was because there was an additional factor: the housing bubble in the USA, which when it burst, greatly worsened the economic downturn.

There's no US housing bubble now, and though there is a leveraged loan problem, I don't think it's as big as the housing debt implosion was.  However, in China there has been a debt explosion, and a shadow banking explosion, and Trump's trade war is dragging the Chinese economy down.  Because China is so big, a Chinese slowdown affects world economic activity.  China buys lost of stuff from its neighbours, and as the latest PMIs show, they are all struggling.  But slowing Chinese orders and sales have also affected Europe.  And in Europe, political stasis is preventing sensible policies to avert the economic downturn.  So it is very possible that the 2020/21 recession will be worse than the 2001/2 recession.  I don't think it'll be as bad as the GFC, but on the other hand, cash/CB discount rates are so low in developed countries that there's very little firepower left to counter an economic slump.  What will be needed is deficit spending by governments, and here's the problem: the US has already shot its bolt with tax cuts for the rich and companies, and Europe, dominated by Germany, has set its face against fiscal deficits. 

On balance, though, I don't think this recession will be deep, it will prolly be prolonged, and the recovery from it will be much delayed.