Is the Fed ignoring this market signal?

The debate is on: Are we headed toward a recession or not?

At least one well-known, and well-respected, economic guru, Raoul Pal, has claimed the world, including the United States, is already in a recession. Former Treasury Secretary Larry Summers says the Federal Reserve must prepare for the worst. Still others say a recession is nowhere in sight -- certainly not here at home.

Indeed, Fed Vice Chair Stanley Fischer said recently that the Fed is likely to raise rates about four more times this year, owing to an improved labor market and expected improvement on the inflation front.

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The truth, it seems to me, is somewhere in the middle of these wildly disparate forecasts.

There is, at the moment, scant evidence of a recession here at home, at least in the broadest sense. GDP is still growing -- however slowly. Unemployment is low by historical standards as job creation accelerated in December, lifting the total number of employed above the pre-recession peak.

Auto sales are at record levels. Housing is on the mend. Inflation-adjusted wages are increasing at an acceptable pace and very few official indicators, save one, are near any level associated with an economic downturn.

Still, the financial markets are acting as if a recession is on the horizon -- if not imminent. Consider these market stats:

Stocks have suffered their worst opening to any year in Wall Street history. The Dow, S&P 500 and Nasdaq are down between 6 percent and 7 percent year-to-date, after ending 2015 on a decidedly downbeat note.

Fed's Fischer: Markets missing mark on future rates

The Dow Transportation Average is in a bear market. That suggests that shipping, a leading economic indicator, is flashing a red warning sign.

Wal-Mart, the best performing Dow stock this year, is surging. It tends to do better in recession than in recovery.

Bond yields are falling, despite the upbeat jobs numbers and a less friendly Fed. The yield curve, or relationship between short and long-term interest rates, is flattening.

Should the curve flatten completely, or even invert, where long rates fall below short rates, that is a very reliable bond market indicator that a recession is coming within six to nine months.

Commodities, particularly oil, continue to crash, as ample supplies of crude, corn and copper outstrip demand by sizable margins. The commodity crunch, which the Fed has deemed "transitory," has proved to be anything but.

Will the Fed be mauled by China?

The one indicator in the U.S. already signaling an increasing risk of recession is the ISM manufacturing report. That indicator is telling us the U.S industrial sector is contracting. While manufacturing represents a far smaller sector of the economy, it has been an engine of growth over the past several years and its weakness could undermine both consumer confidence and consumer spending.

Global manufacturing is also clearly contracting, led by the accelerating weakness in China and its inability to stimulate its economy with additional infrastructure building. China's decreasing reliance on that kind of stimulus has hit resource-related economies quite hard and thrown some into full-blown recessions.

Some pundits have suggested that the U.S. does not import recessions and that the weakness in the global economy has too small an effect on our consumer-driven GDP to do severe damage.

But some reports this morning say China's weakness is spreading to India, and has already hammered emerging-market economies. At best, it will be hard for the U.S. to grow with the entire world in recession.

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Weakness in overseas economies has already pressured U.S. exports. Along with the stronger dollar, that overseas weakness has also cut into U.S. corporate profits, which, ominously, may suffer their third quarterly decline in a row, when the numbers are reported, beginning this week.

As a consequence of all of the above, global stock, bond and commodity markets are sending a very clear signal that should not go unheeded by the Fed.

Deflation is NOT transitory. The global economy is too weak to withstand additional rate hikes from the world's most important central bank.

The domestic economy, while stable, appears headed for a "growth recession," (growth under 2 percent but above zero) if not an outright downturn later this year.

The message of the markets is quite clear. Clouds are gathering on the horizon. However, it does not appear, to me, that a recession is a foregone conclusion.

Still, if nothing is done, either with fiscal or monetary policies, the storm will come … not only to Wall Street, but to Main Street, as well.

Fed was more 'hawkish' than you think: Insana

Commentary by Ron Insana, a CNBC and MSNBC contributor and the author of four books on Wall Street. Follow him on Twitter @rinsana.

Follow CNBC's Opinion section on Twitter @CNBCopinion.