image credit: Pexels

The yield curve is no longer inverted. But some still see an impending recession

October 17, 2019

Recession concerns should be eased now that the yield curve no longer is inverted since it has been a reliable bond-market harbinger of past economic downturns.

And yet, market participants are divided on whether a recent steepening of the curve points to brighter economic prospects, or a more troublesome indication that the U.S. is rushing headlong into a downturn.

The widely-monitored spread between the 3-month bill yield TMUBMUSD03M, -0.62% and the 10-year note yield TMUBMUSD10Y, +0.80% now trades at a positive 10 basis points differential, after inverting as low as negative 51 basis points in August. Wall Street keeps close tabs on yield curve inversions, or when shorter-term yields trade above their longer-term peers, because their occurrence has preceded the last nine recessions since World War II.

Read More on Market Watch