Flashing Red

Flashing Red In recent months, there's been a lot of talk about the inversion in Treasury yields, with the 2-year Treasury yielding more than the 10-year note. That's not supposed to happen and suggests investors are more nervous about the future than the present. It's a good predictor, though not a guarantee, of a recession.  Today brought an even more worrisome signal for the economy. Now even the 3-month Treasury (at 4.04%) is yielding more than the the 10-year (at 4.01%). "Such an inversion is very rare, but it suggests that a recession is on the way or even here," Barron's Lawrence Strauss writes. Barron’s noted in July that when the 3-month and 10-year yields invert, a recession is a little less than two years away on average, according to Dow Jones Market data. However, in 2020 with the onset of the pandemic, a recession occurred one month after those yields inverted. On a closing basis, the last time the 3-month and 10-year yields inverted was March 2, 2020. At that time, the 3-month was at 1.1755%, compared with 1.085% for the 10-year. Read the rest of Lawrence's story here.