The Treasury yield curve inversion is deepening as a key warning of a coming recession flashes its strongest signal since 2007
- On Tuesday, a closely watched
recessionindicator gave its strongest signal since 2007.
- An inverted
yield curvebetween the 2 and 10 year Treasury notes has preceded recessions in 1990, 2001, and 2008.
On Tuesday, the closely watched spread between the yields on the 10-year and 2-year Treasury notes inverted to their deepest point since before the 2008 financial crisis.
The 10-year Treasury yield on Tuesday was 2.91% compared to the 2-year yield of 3.03, a spread of 12 basis points.
The inverted yield curve — when short-term rates exceed longer-term rates — has long been a reliable recession warning, and reflects investors' waning confidence in the
An inverted yield curve preceded the 1990, 2001, and 2008 recessions, according to DataTrek. However, an inversion only predicts a downturn if it lasts for several months, as brief flashes in the 2-year Treasury yield typically don't determine much.
Already in 2022, though, the closely watched 2- and 10-year yields have inverted several times as the Federal Reserve hikes interest rates at an aggressive pace, sparking fears that it could tip the economy into a recession. Fed minutes in June suggested that the
Analysts have broadly warned that the Fed won't be able to achieve a "soft landing" for the economy amid soaring inflation, and many top firms on Wall Street have forecasted heightened risks for a recession. Meanwhile,
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