Treasury Yield Curve Inverts in Historically Significant Recession Warning, Implying Potential 29% Market Drop if Recession Hits
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The Treasury yield curve has inverted, which is the bond market's most severe recession alarm in decades and has predicted every recession over the past 50+ years.
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The current inversion between 10-year and 3-month Treasuries is the steepest in over 50 years, making this a historically significant recession warning.
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If a recession happens, history suggests the S&P 500 could fall by around 31% from its peak based on past recessions, implying 29% downside from current levels.
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Attempting to time the market by selling before a recession and buying back in during recovery has historically backfired and led to missing gains.
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Even if a recession occurs, the S&P 500 has delivered 10% annual returns over time through ups and downs, so patient long-term investors can still expect to be rewarded.