A swift steepening of the U.S. 2-year/10-year yield curve after it inverted last week may have given investors hope that the United States can ...
REUTERS: A swift steepening of the U.S. 2-year/10-year yield curve after it inverted last week may have given investors hope that the United States can escape recession. They should probably take a breath.AdvertisementA catalyst for another inversion might happen later this week if the Federal Reserve's minutes on its July 30-31 meeting on Wednesday or Fed Chairman Jerome Powell's speech on Friday at the Jackson Hole economic conference were to suggest U.S.
While the 2-and-10-year inversion has gone away for now, the previous three bouts of inversion on this part of the yield curve have shown a pattern: a steepen and then return to a more sustained or deeper inversion more than once before a recession hits. "We would caution against seeing the inversion of the yield curve as an infallible predictor of an economic contraction or a bear market," UBS Global Wealth Management's chief investment officer Mark Haefele said.
"We do not view the inversion of the yield curve as a recessionary signal, and see central banks' dovish pivot stretching the growth cycle," said BlackRock Investment Institute on Monday.Here is how the curve has performed in recent years after an initial inversion:
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