The US’ brief yield inversion is worrying some of a looming recession
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Wall Street freaked out a little bit because the US 2-year yield and 10-year yield inverted for a little while this week. Under normal circumstances, it’s meant to be the other way around, and this inversion is interpreted by some as an early sign of a recession. Aside from this week, the last time the curve inverted was in 2019, before the pandemic lockdowns. While some speculate that a recession is on the horizon (that would make it the third one in our young lives, millennials and zoomers), others say just to stay put, not panic and wait for more data points.
Key comments:
When the yields invert, “there has been a better than two-thirds chance of a recession at some point in the next year and a greater than 98% chance of a recession at some point in the next two years,” according to Bespoke.
“I don’t think it augers for recession," said Rick Rieder, BlackRock’s bond chief. “I don’t think it’s as durable an indicator as people think it is."
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