Inversion has been a false signal just once in that time.
Here's a clip of a report in Axios 2 hours ago
U.S. Treasury yield curve inverts again
What the Yield Curve can tell us about the next recession
What it means: When yields on short-dated Treasury notes (typically 3-month bills to 2-year notes) climb above longer-dated ones, it signals short-term borrowing costs are more expensive than longer-term loan costs.
- As Reuters' Dhara Ranasinghe and Sujata Rao note, "Under these circumstances, companies often find it more expensive to fund their operations, and executives tend to temper or shelve investments. Consumer borrowing costs also rise and consumer spending, which accounts for more than two-thirds of U.S. economic activity, slows."
- "The economy eventually contracts and unemployment rises."
Timing: The yield curve has inverted six to 24 months before every U.S. recession and it typically reverts to normal before the recession comes.
- It first inverted in March.
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Percentage point difference between 3-month and longer-term yields on U.S. Treasury bonds
Normal yield curve
Normal yield curve
A Treasury bond is a bet on economic growth. When investors are confident, longer terms have higher yields.
December 2013
Long-term yields were higher
An inverted yield curve
An inverted yield curve
If investors fear a recession, they'll settle for lower yields on long-term debt. The curve "inverts" when short-term yields are higher.
June 1989
Recession began in July 1990
December 2000
Recession began in March 2001
March 2007
Recession began in December 2007
The yield curve in 2019
The yield curve in 2019
The difference between short- and long-term yields has been moving toward an inversion in 2019, which could indicate that investors think we're nearing a recession.
