YC2YR 2-10 US Treasury Yield Curve Weekly Chart; Inversion at Multi-Decade Lows; 2-10 Yield Spread Drops to -90 Bips a New Multi-Decade Low (Greater Inversion)

The 2-10 yield spread is down to 80 bips. It continues sinking into the ooze. Six weeks, ago the same chart was posted explaining the relationship of the hook pattern to bringing on recessions. The expectation was for a recover back to the zero inversion line but alas, the 2-10 spread widens and the yield curve further inverts down to 80 bips the lowest since 1986.

The 10-year yield is at 3.73% and 2-year yield at 4.53% so the difference is 0.80% or 80 basis points. Over the last 6 weeks, the 2-year yield has boosted a slight bit higher in basis points than the 10-year yield so there is more movement on the short end.

Once the yield curve inverts, it may poke around in the inversion territory for a while but always recovers. That action of hooking-back upwards is what brings on the economic recession. Keystone Housing Market Indicator remains in a recession since Christmas. The fake-outs for the hook pattern are comical (purple).

Last August it was time to hook upwards and forecast the recession on tap in the weeks and months ahead but alas, the 2-10 spread dips lower. Then, in September, surely it is time to hook upwards but nope, lower spreads are ahead. Well, December it was time to hook upwards and start to usher-in a recession but nope, not then either. The spread falls again to 80 bips now a matching and lower low.

But there's a new sheriff in town, folks. His name is Possie D and he rides with his posse of chart indicators. The matching low in yield occurs with the RSI, histogram, MACD and stochastics indicators all positively diverged (possie d) and loaded up to shoot the spread upwards back towards the zero inversion line on this weekly basis.

Thus, a guess can be made that yields will drop, on the weekly basis going forward, and the 2-year yield may retreat a bit faster than the 10-year yield decreasing the 2-10 yield spread number and creating the hook pattern.

Thus, it is likely from here the hook will occur and the recession will be on tap in the weeks and months ahead. Once the 2-10 spread heads higher again (less negative), it is only a matter of time when the recession will appear which may be far quicker than analysts expect. Most Wall Street analysts continue saying a soft landing is on tap and the recession fears are way overblown. These positive folks have been proven correct as the hook failures above show but it looks like the jig is up. The Aroon will likely produce an upward cross verifying the hook pattern as the next few weeks play out.

If you bring up a monthly chart, it is possie d and agreeable to the recovery of the 2-10 spread back towards zero producing the hook pattern, however, the MACD is weak and bleak perhaps wanting one more low on the monthly basis. The MACD line is very low, however, and this month has to play out so it may end up possie d as well. This hints that the low for the 2-10 spread is in and it is all back up from here which ushers in an economic recession going forward.

There may be some further chop suey, and the Federal Reserve led by Pope Powell may throw a curve ball at any time, but the 2-10 spread would be expected to recover from here, producing the hook pattern, on a weekly basis, which will usher-in a US recession as the year plays out. Interesting times. Lots of plates in the air. It's a crap-shoot. 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 10:03 AM EST: The 2-year yield is at 4.53%. The 10-year yield is at 3.70%. The 2-10 spread (yield curve) is at 83 bips new negativity. The 2-year yield is steady as the 10-year yield drifts slightly lower sending the 2-10 spread more negative.

Note Added 10:10 AM EST: The 10-year yield is testing the 20-week MA resistance at 3.75%. The 3.75% is also viewed as a key psychological level between 3.50% and 4.00%. Thus, watch the 3.75% resistance going forward since a breach above would be a really big deal.

Note Added Wednesday Morning, 2/15/23, at 5:05 AM EST: The 2-year yield pops higher after a slightly hotter inflation report to 4.59% now only 13 bips from the Fall high at 4.72%. The 10-year yield is at 3.72%. The 2-10 spread (yield curve) is at 87 bips new negativity not seen since the early 1980's. 

Note Added Wednesday Morning, 2/15/23, at 7:05 AM EST: The 2-year yield pops higher to 4.62% now only 10 bips from the Fall high at 4.72%. The 10-year yield is at 3.75%. The 2-10 spread (yield curve) is at 87 bips new negativity. Note that over the last couple hours, both the 2-year and 10-year yields move higher 3 bips in unison. The 2-year took the bigger jump on the inflation data creating the greater inversion. Another hook pattern is given the hook. The recession does not appear if the 2-10 spread keeps sinking further into the blackhole negativity. The hook pattern is waiting for Godot but perhaps one day it will arrive and usher in the US recession going forward.

Note Added Wednesday Morning, 2/15/23, at 8:10 AM EST: The Treasury yields are; 2-year 4.65%, 5-year 4.02%, 10-year 3.75%. Bingo. Old guys say bingo a lot. The 2-10 spread carves out a new low at -90 basis points!.

Note Added Thursday Morning, 2/16/23, at 6:00 AM EST: The Treasury yields are; 2-year 4.58%, 5-year 3.99%, 10-year 3.78%, 30-year 3.84%. The 2-year is on a wild ride. The 2-10 spread becomes less inverted at -80 basis points. A new hook pattern is conceived. Will this new hook pattern be a fake-out like the others, only to lead to more negative spreads, or, will the hook pattern prevail creating less negative spreads in the days and weeks ahead sending the 2-10 back towards the zero line and ushering-in the US recession?.

Note Added Sunday, 2/19/23: The Treasury yields are; 2-year 4.62%, 5-year 4.03%, 10-year 3.81%, 30-year 3.87%. The 2-10 spread is -78 bips well off that -90 basis points low from last week. Will this new hook pattern upwards, that is in its infancy at only a day or so, continue moving higher to usher-in the US recession gong forward, or is it another fake-out move higher?.

Note Added Ash Wednesday Morning, 2/22/23: The Treasury yields are; 2-year 4.69%, 5-year 4.16%, 10-year 3.94%, 30-year 3.96%. Note how the 10's pop 13 bips while the 2's bump only 7 bips higher so the yield curve is less inverted. The 2-10 spread is -75 bips (-73 bips an hour ago) now 15 basis points off that -90 basis points low from last week. Very interesting. The hook pattern is in play and continuing higher. Is this the real hook this time, that will usher in the US recession going forward? Everyone on Wall Street says no worries.