Bond market hangover: Investors must 'ignore the noise'

Does not signal recession

Lauren Mason
clock • 4 min read

The recent yield curve inversion of the US bond market does not mean the writing is on the wall for a recession, according to several industry commentators, who believe a “complex range of circumstances” have led to unusual market movements.

On Tuesday evening (29 March), the yield on two-year Treasuries temporarily exceeded that of ten-year US government bonds, which suggests shorter-term investments in the asset class are perceived as higher risk than longer-term ones. The last time this happened was in September 2019, approximately 18 months before the last economic recession. In fact, during each of the six recessions experienced over the last 40 years, the difference between ten-year and two-year Treasury yields - the two-ten year yield curve - has reliably inverted approximately 1.5 years before GDP has turned negat...

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