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Inverse Yield Curve Doesn’t Guarantee Recession, But This Sign Might…

I wanted to take a moment to clear up confusion and clarify some things about the yield curve, and what it means at this juncture for the stock market and other risk assets.

When looking at the yield differential between the longer-term yields (10-year Treasury note) and the 2-year yield, you’ll see an inversion of more than -100 basis points.

People usually take this as a sign that we’re heading towards a recession and a stock market crash is inevitable.

But that’s not the case here.

Here’s what’s actually going on in the market, and when investors should begin to worry…

This post originally appeared at Investors Alley.