July 7, 2022, 11:48 pm EDT
Inverted Yield Curve
An inverted yield curve means that the rates of 10-Year Treasury minus 2-Year Treasury (T10Y2Y) become negative as shown. Usually, it hints coming recession within about one year.
In normal economic conditions, the longer the loan (like 10 years vs 2 years), the higher the rates. However, we are not in normal markets now because we can see it happened twice in front of our eyes for the negative values of this chart. Two yellow circles highlighted the inverted events in April and July 2022.
Therefore, if you believe the statistics and history, then we should prepare for the recession based on this evidence. Perhaps, the best way to witness this speculation is to read this article again either a few months later or next year.
