YC3MO 3-Month to 10-Year and YC2YR 2-Year to 10-Year Yield Spreads (Yield Curves) Weekly Charts; Treasury Yields Invert to Levels Not Seen for 12 Years

The 3-month to 10-year yield spread, YC3MO, inverted (drops below zero) earlier this year and more recently, the 2-year to 10-year yield spread, YC2YR, inverts a couple weeks ago. The inversion of the 2's-10's yield curve created market angst on Friday.

Most Wall Street analysts and pundits, however, are quick to pooh-pooh the yield curve inversions and proclaim that there is no fear of a recession in the near-term. History is somewhat on their side as evidenced by the charts. The yield curves inverted in early 2006, recovered back above, and then inverted again in mid-2006. The stock market peaked in October 2007 and went into a multi-month downtrend then into a crash profile September 2008 through March 2009.

That is why the pundits proclaim no chance of recession. The blue circles show the October 2007 stock market topping area; the yield curves had clearly re-steepened by then. Thus, it took from 16 months to 22 months for the stock market to peak and the recession to begin arriving. This is why the analysts and strategists are whistling past the graveyard; they say a recession and stock market top may be 1-1/2 to 2 years away. That is what played out last time. Even using the 3-month inversion that began a few months ago, this still places the recession and stock market top out 1 to 1-1/2 year which would be Q3 2020, Q4 2020 or Q1 2021. They will be surprised if the recession is actually beginning now; in Q3 2019.

There is a fly in the ointment. The modern-day, obscene Keynesian monetary policy carried out by global central bankers began in March 2009 with former Fed Chairman Bernanke. The Fed, BOJ, ECB, BOE, RBA, RBI, PBOC and other central bankers continue colluding, coordinating and intervening in markets for over one decade!! Lord Have Mercy on Our Souls!! No one truly knows what any asset is worth anymore since every asset class has been purchased into lofty heights due to the easy money liquidity. People do stupid things with money when it is free and easy. Price peaks may be appearing in stocks, bonds, real estate, art, collectibles, antique cars, etc... The Keybot the Quant algorithm identified 7/17/19 as the start of a housing recession.

The wild card is the impact of central banker policy on the yield curve. Like negative rates around the world, no one knows the impact from this sick and twisted central banker behavior. Throw out your college economic textbooks; they are worthless in this insane and historic market environment. The wealthy do not care about a negative outcome ahead because they got theirs; they raped the crony capitalism system for all its worth over the last decade so it is no skin off their backs if everything goes to H*ll in a handbag. It's great to be rich.

Do you think a recession and stock market top is another 1-1/2 to 2 years away? Or has markets already peaked in this September 2018 to July 2019 time period? If the stock market peaked the recession may be here already. There is lots of manufacturing data on tap this week as well as GDP on Thursday and the Fed's favorite gauge of inflation, the PCE data, on Friday. Consumer sentiment and confidence is key to sustaining an elevated stock market. When people lose hope and confidence, they stop spending money. The Con Con data drops at 10 AM EST Tuesday morning. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.