First inverted yield curve in more than a decade stokes recession fears

(Image credit: Courtesy Bloomberg Markets)

last updated 15 August 2019

The two-year Treasury note yield traded above that of the 10-year note on Wednesday for the first time in more than a decade. The inversion increased recession fears.

An inverted yield curve often serves as an early warning of a looming recession because it suggests monetary policy and financial conditions are constraining the economy. The 10-year Treasury note's yield fell 5.7 basis points at 1.619 percent, according to FactSet; the 2-year yield dropped 4.1 basis points at 1.628 percent. Such an inversion has preceded the last seven recessions. "The equity market is on borrowed time after the yield curve inverts," Bank of America Merrill Lynch strategists wrote. U.S. stock index futures dropped sharply after the inversion, CNBC reports.

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Harold Maass is a contributing editor at The Week. He has been writing for The Week since the 2001 debut of the U.S. print edition and served as editor of TheWeek.com when it launched in 2008. Harold started his career as a newspaper reporter in South Florida and Haiti. He has previously worked for a variety of news outlets, including The Miami Herald, ABC News and Fox News, and for several years wrote a daily roundup of financial news for The Week and Yahoo Finance.