YC3MO 3 Month to 10-Year US Yield Curve Weekly Chart

The yield curve inversion talk was all the rage a couple months ago but the US-China trade deal drama and ongoing central banker money-printing have taken center stage. The 2-10 yield curve has resteepened above zero, above inversion, and the 3-month to 10-year yield curve is almost there. The hook pattern is key (black lines) because once the yield curve uninverts, resteepens, the recession is locked-in; it is only a matter of when.

Wall Street analysts, strategists and pundits are referencing their economic textbooks and proclaim that a recession remains a year or more away based on prior yield curve inversions. They are correct on the history, and may even be correct that it rhymes with the present day, however, not one analyst questions the yield curve in relation to over one-decade of central banker Keynesianism gone mad.

If the Federal Reserve's and other central banker's actions have maintained a steeper yield curve than would have occurred without their intervention, perhaps the yield curve would have inverted far sooner, many months ago. If that is the case, the recession may be here, now, and beginning, and no one knows it. The manufacturing sector verifies this perspective. Remember that it is not until economic data such as GDP is revised over and over, and over, again after a few years, that the exact start of any recession is pin-pointed.

When recessions, come, they arrive fast. Workers are canned and most everyone immediately stops spending sending the country into a tailspin. The 2007-2009 recession and stock market crash period is long forgotten. All of you 30 years or younger have never seen a recession and how it will impact your lives. You are in for a rude awakening. Your whole world as you now understand it, and your plans, will be thrown into complete disarray. You and/or your significant other may lose your job over the next year or two. It does not even matter that you lose your job, since family and friends will lose theirs, and society will take on a melancholy tone.

If you are a young person, millennial or gen Z'er, under 30 years old, read Keystone's article "Clueless Millennials Must Prepare Financially, Mentally and Emotionally for the Coming Recession; A PSA (Public Service Announcement) for Millennials Explaining the Ugly Realities of Economic Recession." Your world is about to drastically change over the next couple years. It is best that you know what is coming.

The yield curve spread in the chart above was far below zero, firmly into inversion, way below the moving averages so a mean reversion was needed and the spread resteepens now knocking on the 20-week MA resistance. When the yield curve resteepens above zero and the spread runs to about 50 bips, that will tell you that a recession is on tap within 2 months. Keystone does not buy into the 'recession is a year away or more' camp. We will probably see recession appearing by year-end. Buy your Christmas and holiday presents now because it may be a Blue Christmas, as Elvis, "The King," would sadly sing. 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.

Note Added Sunday, 9/15/19: YC3MO is at -0.06% only 6-bips inverted. It is likely that the 3-month to 10's will resteepen, and uninvert, in the week ahead.