Inverted Yield Curve, Again?
Are we in for another recession?
Earlier this year in April the yield curve inverted. Last week, it inverted again. The 10-2 Year Treasury Yield spread is now -.20% as of July 17th, 2022.
This inversion is a red flag to many investors because the inversion of a yield curve is a leading indicator that a recession may occur. Since World War II, every yield curve inversion has been followed by a recession.
Many experts say that this time is different. However, how really different is it? Yes, we had a coronavirus pandemic, but there are always unique situations that lead to recessions - ranging from the 1957 Asian Flu pandemic to the Arab Oil Embargo.
Is this time really different, are there fundamental economic problems, or is the yield curve inversion just a self-fulfilling prophecy?
Please leave comments below to share your opinion, and thank you for reading this article.
Wow, interesting and I learned something new!
Great article, Julia! Like the interactive feature as well, with the poll. I think we are in for an uncertain and volatile environment for the foreseeable future, meaning a focus on high quality investments (and subsequently sacrificing yield for safety) is crucial.