![]() The inversion steepened in March as the collapse of Silicon Valley Bank unfolded, a move that market can interpret as a major omen for the US economy, the BofA analysts said. ![]() The 2-10 year yield curve recently notched its deepest inversion in over 40 years. Given that those bond yields inverted in November of last year, the recession should be arriving in May. The analysts say that historically, a recession kicks off six months after the inversion of the 2-10 year curve. Short-term yields surpassing long-term yields are a highly-watched signal of an incoming recession, with the inverted 2-10 spread correctly predicting the recessions of 1990, 2001, and 2008. Strategists pointed to the inverted Treasury yield curves – namely, the spread between the 2-year and 10-year yields, and the spread between the 3-month and 10-year yields. The bond market's notorious recession indicator has flashed signs of an incoming downturn for months – and history says it's sending a warning to markets that a downturn could kick of this quarter, according to Bank of America strategists. ![]()
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