May 10, 2019 - Economy

The Treasury yield curve inverts again

The 10-year/3-month Treasury yield curve inverted again on Thursday, but investors may have missed it because it lasted for only minutes. It's the second time this year the yield curve has inverted, which is an accurate recession indicator cited by the Fed.

Be smart: Investors and market analysts have largely written off the inversion as the product of central bank manipulation or a market aberration, and the S&P 500 had rallied 3% since the curve inverted on March 22 to the end of last week, before Trump's Sunday night tariff tweets erased almost all of those gains.

Driving the news: The yield curve has been compressing all week as prospects for a trade agreement between the U.S. and China have diminished.

  • Economists note that the ominous yield curve inversions that have historically accompanied recessions typically last longer than a matter of minutes or days. The curve was inverted in March for only about a week.

History: Ahead of the financial crisis the yield curve inverted in late 2005, 2006 and again in 2007 before the stock market collapsed in 2008.

Go deeper: Will the yield curve lead to recession? It really is different this time

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