EDV - Chart Of The Week: Treasury Yield Curve Signaling 'All Clear'

2024-07-15 14:05:00 ET

Summary

• Ahead of many recessions in US economic history, the yield curve has gone negative - or "inverted."
• Now that it appears growth could pick back up at the same time the Fed could start cutting rates, we’re seeing the 2-10 spread rise.
• Past periods of re-steepening have sometimes been accompanied by higher volatility and bearish market action. That’s because the Fed went too far when it hiked, waited too long to start cutting, credit markets started to "blow up," and so on. That doesn’t look to be the case this time around.

By Mike Larson

Don’t look now, but one of the “recession indicators” that didn’t really pan out last year is now close to signaling “all clear.” I’m talking about the Treasury yield curve, or more specifically, the “2-10 spread.” ...

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