Recession Signal Getting Louder: 5-Year Yield Inverts With 3-Month Yield

-edited

The yield curve is inverted in 11 different spots. The latest is 5-year to 3-month inversion.

The yield curve recession signal is louder and louder. Inversions are persistent and growing.

Let's compare the spreads today to that of December 18, the start of the December 2018 FOMC meeting.

Yield Curve 2019-02-26 vs December and October 2018

Yield Curve Spread Analysis

Spread Changes

  • Yellow: Spreads Collapsed Since October (1 Month to 5 Years)
  • Pink: Spreads Remained Roughly the Same (7 Year)
  • Blue: Spreads Increased (30-Year and 10-Year)

Something Happening

Something is happening. What is it?

Possibilities

  1. The bond market is staring to worry about trillion dollar deficits as far as the eye can see
  2. The bond market has stagflation worries
  3. The bond bull market is over or approaching

My take is number one and possibly all three.

An in regards to recession the economy is weakening fast.

Mike "Mish" Shedlock

Comments (18)
No. 1-15
shamrock
shamrock

The recession indicator is the 2 to 10 year spread, which is still +15 basis points.

Mish
Mish

Editor

There is no foolproof indicator but 1-5 probably as meaningful as 2-10

nic9075
nic9075

Consumer confidence jumped 10 points to 131 and is within 10 points of its all time high and building permits were up 0.3%. Both are important leading indictors. Its looking like 1st half of 2014, weak 1st quarter and strong (over 3% GDP ) 2nd - 4th quarters

Greggg
Greggg

The sale of the 7 year didn't fare to well today. 7 year dropped 4 bp.

2banana
2banana

How is this different from obama's trillion dollar deficits? With a much lower GDP and less folks employed during that time period?


  1. The bond market is staring to worry about trillion dollar deficits as far as the eye can see

My take is number one and possibly all three.