The yield curve normalized — so why is the Fed stress-testing a 58% market crash?

Here's a weird split happening in the macro data right now. The yield curve — historically one of the most reliable recession signals — is no longer inverted. The 10-year is at 4.45%, the 2-year at 3.98%. By that measure, the alarm is off.

But the Fed's May 2026 Financial Stability Report projects a 58% equity drop in its severe stress scenario. Geopolitical risk just topped their survey of systemic threats. And JPMorgan's Jamie Dimon spent part of his Q1 earnings call warning that the next credit recession would be "worse than people think" — pointing specifically at private credit, where 1,000+ companies carry debt underwritten during a rate era that no longer exists.

The interesting problem: traditional indicators are calming down while the less-visible signals — private credit leverage, AI-sector overextension, geopolitical cost shocks — are quietly getting louder. High-yield spreads at 285 bps aren't screaming distress. But they're also not pricing in the scenario the Fed itself is modeling.

I built Recession Tracker to sit exactly in this gap — tracking the indicators that matter most together in one place, so when they start diverging (like now), it's visible and legible for people who aren't full-time macro watchers.

What are others here seeing in the credit market signals? Curious whether founders tracking economic conditions are reading this as a "calm before the storm" or genuine stabilization.