Key Yield Spread Goes Negative!!: Is a Recession About to Follow?

WRONG!!

For the first time since 2007, the  U.S. 10-year Treasury yield is below the 2-year rate.

In other words, this key yield curve spread has gone negative.

I often run the chart below in the EPJ Daily Alert, which shows the yield curve turning negative and the recessions that follow:

The red dashes show every time the yield curve turned negative since 1965 and the recessions that followed (gray shaded periods). Only the 1990 recession occurred without the yield curve going negative--but it did get close (red circled area). It is a very strong indicator.

That said, I am advising EPJ Daily Alert readers to ignore the negative yield curve signal this time. There is a much more important interest rate spread giving an entirely different signal---and that signal should be followed rather than the 10-year minus 2-year negative yield curve signal.

Subscribe to the EPJ Daily Alert today and you will get my coverage of this indicator which hardly anyone else is covering. I explain why it must be watched and why it is a more important indicator.  Click here to subscribe.

-RW