Market news
29.03.2022, 17:46

US Bond Yield Alert: 2-year/10-year spread inverts for the first time since 2019, signals coming recession

The difference between the US 2-year (just under 2.40%) and 10-year (just under 2.40%) yields just fell below 0.0% (or "inverted") for the first time since 2019. Over the past 70 years, this has been a reliable indicator that a recession in the US economy is coming within the next 18-24 months.

The 2s/10s inversion comes after multiple inversions on other key parts of the US curve. Other key spreads like the 5s/10s and 5s/30s have been inverted for a while now. Market participants often interpret an inverted yield curve as a sign that monetary policy in the short-term is overly tight, or more broadly, as a reflection of expectations for weaker longer-term growth versus short/medium-term growth. 

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