Aug 6, 2024 - Business
Inversion, interrupted
Add Axios as your preferred source to
see more of our stories on Google.
The 10-year Treasury bond yielded less than its 2-year equivalent for the past two years, the longest ever the yield curve has been inverted. For a few moments yesterday, that record stretch was interrupted.
What happened: At 8:38am, the 2-year yield was 3.65%, slightly lower than the yield on the 10-year which was 3.67%.
- Yields then soared after stronger-than-expected service sector data, and the curve re-inverted.
The big picture: A reversal of the inversion (a process known as disinversion) has been underway in recent months.
- Last summer, the yield on the 10-year yield was a full percentage point lower than that of the 2-year — the largest difference since the 1980s.
The intrigue: An inverted yield curve has, at least in the past, been a reliable recession predictor. But a disinverting yield curve is also a sign of a recession. ¯\_(ツ)_/¯.
- The economist whose research helped link yield curve inversions with recessions told Axios last year that the trend toward disinversion happened before the last four recessions.
- "An inversion is the long-leading indicator of recession, and a disinversion is the signal that maybe you're entering or you're near an actual recession," State Street Global Advisors' Matthew Nest told Reuters.
