Treasury Yields Sound Alarm Bells for Looming Recession, But Historical Data Offers Some Hope
• Treasury bond market predicting a recession soon, with a near perfect track record of forecasting past recessions • Current yield curve inversion is the most severe since 1981, implying an unprecedentedly high recession probability • Recessions typically cause sharp declines in the stock market (S&P 500 fell 31% on average) • However, stocks rebound before recessions end (30% median gain) so timing the market is difficult • Despite potential recession, S&P 500 returned 10% over last 30 years, so long-term returns still possible even with downturns