Treasury Yield Curve Inversion Signals High Recession Risk Within 2 Years
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The Treasury yield curve has inverted, which is the bond market's most severe recession warning in 50+ years. Historically, a recession follows within 2 years.
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The current inversion between 10-year and 3-month Treasuries is the steepest since 1980, suggesting a high likelihood of recession by October 2024.
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Past recessions have led to S&P 500 declines averaging 31%, implying potential 29% drop from current levels. However, each recession is unique so decline could vary.
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Attempting to time the market by selling before and buying after a recession rarely works. Investors often miss the rebound.
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The S&P 500 has averaged 10% annual returns despite recessions. Patient long-term investors tend to be rewarded over time.