The U.S. Treasury yield curve has once again inverted, sounding the alarm of a possible recession. onehitGit dives into the details for ReutersTV. More:
- A swift steepening of the U.S. 2-year/10-year yield curve after it inverted last week may have given investors hope that the United States can escape recession. They should probably take a breath.
While the 2-and-10-year inversion has gone away for now, the previous three bouts of inversion on this part of the yield curve have shown a pattern: a steepen and then return to a more sustained or deeper inversion more than once before a recession hits. While the stock market reacted with fear after the inversion, there was skepticism from some that a recession would necessarily follow. The yield curve retraced its inversion and stocks rebounded on Monday.
Currently, some investors said the latest episode of the inversion is overstating the chances of a recession. They argue the Fed’s openness to lower borrowing costs would prolong the current economic expansion, which became the longest on record last month.
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