43 Jennifer Sor Fri, April 28, 2023 at 6:57 PM EDT Don Emmert /AFP/GettyImages A classic recession indicator is flashing signs that the long-awaited downturn is about to start. BofA strategists pointed to two points in the yield curve that have inverted, moves typically followed by a recession. https://www.yahoo.com/finance/news/notorious-recession-indicator-says-economic-225728585.html "Yield curve says recession starts now; markets await confirmation from labor market," the analysts wrote. 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. 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. 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. - ADVERTISEMENT - The analysts say that historically, a recession kicks off six months after the inversion of the 2-10 year curve. Given that those bond yields inverted in November of last year, the recession should be arriving in May. The 2-10 year yield curve recently notched its deepest inversion in over 40 years. 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.
