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.