The 2-year and 10-year Treasury yields inverted for the first time since 2019 on Thursday, sending a possible warning signal that a recession could be on the horizon. The bond market phenomenon means the rate of the 2-year note is now higher than the 10-year note yield. This part of the yield curve is the most closely watched and typically given the most credence by investors that the economy could be heading for a downturn when it inverts. The 2-year to 10-year spread was last in negative territory in 2019, before pandemic lockdowns sent the global economy into a steep recession in early 2020. The yield on the 10-year Treasury fell to 2.331%, while the yield on the 2-year Treasury was trading at 2.337% in late trading Thursday. When the curve inverts, “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.
Source: CNBC – Bonds
