YC2YR 2-10 US Treasury Yield Spread Weekly Chart and FRED Long-Term Yield Curve Chart; Yield Curve Most Inverted Since 1981

The yield curve reinversion fake-outs continue. Huh? Say what? As prior yield curve charts show, the hook pattern brings on the recession. It is truly different this time with many fake-out moves higher off the low points of the inversion but none managing to reinvert all the way.

A recession appears generally 6 to 24 months after the yield curve inverts, 18 months is a rule of thumb, but of course, some come on fast and some are slower to arrive, like now. The yield curve keeps spending time with Godot unwilling to commit to the recession as yet.

Each time the hook pattern was ready to guarantee the recession, whammo, it is smacked lower and prints down at -110 basis points (bips) this morning 7/3/23 at the start of Q3. The 2-year yield is 4.94% and the 10-year yield is at 3.84% so the difference is -1.10% or -110 bips. The yield curve inversion occurs when the 2-year is higher than the 10-year and the first taste occurred in March 2022 a long 15 months ago.

The hook pattern hinted at a recession beginning early this year but that was nullified and the inversion drops to -105 bips give or take in March 2023. The positive divergence reinverts the yield curve and it looked like the recession was coming fast in March. Whammo. The yield curve is spanked back down nullifying the hook pattern.

Another attempt is made to reinvert but that ends in May with the -40 bip level formidable resistance.

This morning the record -110 bips occurs and the blue lines show the positive divergence remaining in place. The yield curve will want to bottom again in the coming days or week or two and then begin a multi-week move higher. Will this be the hook pattern that brings on the recession? We'll see.

The ADX pink box shows that the downward move in the yield curve was a very strong trend lower during 2022 and into April but that is where the strong trend lower ended bolstering the idea that the yield curve wants to recover higher again.

Obviously, as the yield curve reinverts, watch the -40 bips level. It will probably be tested in July (this month). Once the -40 bips is taken out to the upside, the recession will rear its ugly head.

Companies continue announcing layoffs but the US economy is supported by the upper middle class and wealthy elite, that benefitted greatly from over a decade of Federal Reserve and Congressional money-printing, that keeps spending money. 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 Thursday, 7/6/23: The 2-year yield is at 5.00% and 10-year yield at 4.06% for a -94 basis point inversion well off the lows and dis-inverting.

Note Added Friday, 7/7/23, at 8:48 AM EST: The US Monthly Jobs Report is weaker than expected at 209K jobs with a 3.6% unemployment rate. The 2-year is at 4.96% and 10-year at 4.05% for a -91 bip inversion. Remember, the rubber hits the road, and a recession is at hand, when the hook pattern moves up through the important -40 bips resistance.

Note Added Saturday, 7/8/23: The 2-year is at 4.95% and 10-yr at 4.06% for a -89 bip inversion. The yield curve dis-inverts over 20 basis points in a couple days but it is chop suey drama unless the hook pattern continues higher and takes out that -40 bip resistance to announce the US recession.

Note Added Monday, 7/10/23: The 2-10 spread dis-inverts to -85 bips.

Note Added Tuesday, 7/11/23, at 4:24 AM EST: The 2-year yield is at 4.83% and the 10-year is at 3.96% for a -87 bip inversion.

Note Added Thursday Morning, 7/13/23, at 4:00 AM EST: The 2-year yield drops to 4.64% on the inflation data (less inflation; dollar drops) and the 10-year is at 3.82% for an inversion at -82 bips. The yield curve (2-10 spread) continues dis-inverting to -82 basis points.