One of the chief recession indicators plummeted to triple-digit negative territory in the middle of the trading week.
The popular spread between the two- and ten-year Treasury yields declined to -108 basis points on Wednesday, the lowest level since September 1981.
The two-year yield climbed above five percent, while the ten-year yield was below 3.97 percent.
It should be noted that the yield between these two Treasurys has been inverted since last fall.
The yield curve inversion deepened after Federal Reserve Chair Jerome Powell revealed that interest rates would go higher than what the institution first thought.
Even the Fed’s preferred recession gauge — the three-month and ten-year yield — widened to 105 basis points.
So, why does this matter?
History confirms that an inverted yield curve guarantees a recession in the future or even that the U.S. is already in an economic downturn, which might be hard to surmise based on the latest data.
Grab your popcorn.
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