Economics
Bond Investors BattleĀ Over Whether Inversion Means Recession
- Inversion has predicted five U.S. contractions since 1980
- āReality is that the bond market smells trouble:ā Mediolanum
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Bond investors are locking horns over whether the inversion of yield curves really means the global economy is headed for recession.
For some, its predictive record speaks for itself. The last five times the yield on 10-year Treasuries dropped below those on two-year securities, a contraction followed. For others, the bond market is now so distorted that an inversion isnāt the kiss of death it used to be, though it may still become a self-fulfilling prophecy.