Tuesday, January 30, 2024

Where is the yield curve un-inversion?

The figures below show the graphs of the 10y-3m Treasury yields and 10y-2y Treasury yields. The inversion in the 10y-3m graph is the best indication of an impending recession, and that graph typically un-inverts immediately prior to a recession.





While the first graph does not show an un-inversion, the second (i.e., 10y-2y) does. And the second tends to predict the first, because the 2y yields tend to predict the 3m yields. That is where the yield curve un-inversion is, at the moment. The video linked below discusses this in a bit more detail.

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