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Yieldinversioncurve

One Chart to Rule them All ~ 10Y/2Y and 10Y/3M Yield Spreads10Y/2Y and 10Y/3M Yield Spread One chart to rule them all. I have combined the 10Y/2Y Yield Spread (purple line) and the 10Y/3M Yield Spread (blue line) onto one chart. You can get updated readings on it at anytime on my TradingView page (link in bio above) I have measured the historic timeframe from un-inversion to recession for both datasets. Un-inversion occurs when the yield spread rises back above the 0 level. Given the 10Y/2Y Yield Spread has just un-inverted (moved above 0), I thought this a worthy exercise. The findings are interesting and useful. Main Findings / Trigger Levels The findings are based on the last 4 recessions (this as far back as the 10Y/3M Yield Spread chart will go); ▫️ Before all four recessions both yield spreads un-inverted (only one has to date); - At present only the 10Y/2Y yield spread has un-inverted (2nd Sept 2024), thus we can watch for the next warning signal which is an un-inversion of the 10Y/3M yield spread. Without both yield spreads un-inverting the probability of recession is reduced. ▫️ The 10Y/2Y typically un-inverts first and the 10Y/3M un-inverts second. -Historically the delay between the 10Y/2Y and the 10Y/3M un-inversion is between 3 to 10 weeks (23rd Sept – 11th Nov). This is the date window that we can watch for a 10Y/3M un-inversion (based on historic norms). -If we move outside this window beyond the 18th Nov with no 10Y/3M un-inversion, then we are outside the historic norms and something different is happening. Nonetheless watching for the un-inversion of the 10Y/3M after this date could be consequential. ▫️ On the chart I have used the last four 10Y/2Y yield spread un-inversion timeframes to recession and created a purple area to forecast these from the recent the inversion on the 2nd Sept 2024 forward (Labelled 1 - 4). This creates a nice visual on the chart. Based on these historic timeframes and subject to the follow up 10Y/3M un-inversion confirming in coming weeks, the potential recession dates are as follows (also marked on chart); 1.28th Oct 2024 (based on 2000 10Y/2Y un-inversion to recession timeframe) 2.03rd Feb 2025 (based on 2020 10Y/2Y un-inversion to recession timeframe) 3.12th May 2025 (based on 2007 10Y/2Y un-inversion to recession timeframe) 4.25th August 2025 (based on 1990 10Y/2Y un-inversion to recession timeframe) ✅ Remember, you can check in on this chart and press play to get updated data at any time by clicking the link in the comments below or by following me on TradingView👍 ▫️ I will include a table in the comments which outlines all of the above metrics with dates. I will also share a chart with a zoomed in version of present day so that all the above trigger dates can be more closely monitored. Finally, it’s important to recognize that these findings and trigger levels are based on the last four recessions. There is no guarantee that a recession will occur or occur within the set trigger levels. What we have is a probabilistic guide based on historic patterns. This time could play out very differently or not play out at all. Regardless, all of the above findings help us gauge the probability of a recession with historic timeframes to watch. It leaves us better armed to make the necessary risk adjustments, particularly if the 10Y/3M yield curve un-inverts. Price is king, and at present, prices are pressing higher on most relevant market assets. From the above findings and the current positive market price action, it appears we have a little more time before being hauled into a longer-term correction or recession. I lean towards the later dates (2, 3, and 4 above) for this reason. Interestingly, many of my historic charts from months ago and last year suggested Jan/Feb 2025 (also option 2 above) as a very high-risk period. You can view these charts under the above specific chart on TradingView. This chart is your one-stop shop for checking recession trigger levels based on historic timeframes for both yield spreads. You can update this chart data anytime on my TradingView page with just one click. Be sure to follow me there to access a range of charts that will help you assess the direction of the economy and the market. Thanks again for coming along! Remember, you can check in on this chart and press play to get updated data at any time by clicking the link in the comments below or by following me on TradingView. Thanks PUKA
FRED:T10Y3M
by PukaCharts
12
The yield curve has inverted, how to overcome this?Content: • Difference between interest rate and yield? • Why it is important to note of yield curve inversion? • How to tell when Yields are inverted? • What is the long-term trend for interest rates and yields • How to manage a rising yield? Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. 1. Difference between interest rate and yield? i. Interest rates are a benchmark for borrowers and ii. Yields are for lenders. For eg. investors to the U.S. government iii. Both interest rates and yields move in tandem together 3. Why is it important to note yield inversion? i. For eg. - when the return on a 30-years yield is lower than the 2-year yield, that indicates a ii. For lenders or investors – a pessimistic outlook, a reluctance to commit their money to the longer-term bond, they prefer short-term deposits as the market is unclear in the long-term. iii. For borrowers – most individuals or companies have shorter-term borrowing, for eg a 2 years fixed rate or a bridging loan. When the yields are inverted, suddenly they find them paying more on interest rates repayment. Since interest rates and yields move in tandem, expect the shorter-term lending rates to go higher. This will hurt companies and individuals who have higher leverage items on their books. If you are into shorter-term trading, do look into the market with live feed data. I am starting an inflation series, in the next video tutorial, we will discuss why inflation is happening not just in U.S. but all around the world. Micro 10 Years Yield Futures 0.001 = US$1 3.488 = 3488 x US$1 = US$3,488 3188 to 3488 = 300 x US$1 = US$300
TVC:US02Y
by konhow
10-2 Curve Yield Inversion is foreshadowing recession AMEX:SPY FRED:T10Y2Y Here is my DD on why I think we will officially enter recession early 2023. Current situation is identical to 2000 tech bubble. Back then 10-2 curve yield inversion dropped to its lowest around Spring-Summer 2000. Then the official recession started Spring 2001. Market didn’t fully bottom until end of 2002/early 2003. Fast forward to 2022, we’ve just reached the lowest 10-2 curve yield inversion since 2000. Meaning a few months from now we will officially be in recession, either end of 2022 or early 2023. Which I suspect could last until early 2024. Since U.S election is scheduled for Fall 2024, Fed and politicians will have to prop the economy back up so they can use “economy recovering” for voting narratives which is what can trigger the next real bull trend. Conclusion: curve yield inversion has always been indicative of an upcoming recession, so the real bear market hasn’t even really begun yet. What we recently experience was most likely just a warmup👀
FRED:T10Y2Y
by TheRealWolfette
SPX: US10Y-US02Y Yield Curve Inversion Giving A Market SignalBy now if you've been paying attention you've heard about the Yield's inverting and why it could mean imminent recession. I am not here to argue one way or the other, just going to look at the data objectively and hopefully use it to gauge where we can be headed over the next few quarters. I will let the chart do most of the speaking but I will give you a few basic statistics. I have taken each duration it took from the exact point of inversion to exactly when it led to a Correction or Recession. The days were: ~21 Days: (19%) Correction ~203 Days: (-49%) Recession ~98 Days: (-8%) Correction ~609 Days: (-57%) Recession ~168 Days: (-32%) Mini-Recession *I count this one as an outlier since Covid was the catalyst* If we take the Mean of this data it suggests that between (Now - 220 Days) from now, we very well could be entering a recession. The chances significantly increased once yields were inverted. Here is a previous post in which I analyzed previous cycles of Bond Yields. Notice how fast Yields have tightened in comparison to past cycles. The pace at which this cycle was elevated was much more rapid than in previous cycles and the FED has never had to tighten policy into such a slowing economy so it is reasonable to assume the end will approach fast as well. FED Fund Rates are priced in at 2.5% as of right now. They also plan to QT and decrease their balance sheet. No matter what your perspective on the FED's Rate Hikes, whether it be 3-10+ hikes, they are only going to keep raising rates until the market gives out. Once it does, they will stop raising rates. So objectively, no matter the scenario, the outcome is very likely the same. Most of all, in times like these, stay objective. (IF; THEN) is your best friend in times like these. Adapt and let the market speak for you. Don't hold on to bias, or what you think is going to happen with the market. The market doesn't care.
SP:SPX
by NoOneWhoIsSomeone
10
T10Y2Y Yield Inversion Briefly Occurred on Mar 29 and T10Y3M TBCHistorically, yield curve inversion had always predicated a future recession. Normally, both FRED:T10Y2Y and T10Y3M require inversions and T10Y3M is yet to invert. Historically, in the event both yield curves invert, the recession came in a delayed phase of 7-24 months from the curves invert. What this means for the market is, at least in the short- to mid-term, the market is set up to stay bullish. Unless there is a significant negative surprise from geopolitical conflicts, unexpectedly high CPI prints the reversal trend we observe is set to maintain in the next coming months. Particularly, AMEX:SPY and NASDAQ:QQQ are reaching previous highs and I'm eyeing on these indices to see if they reach and surpass that level. It would be wise to elevate your news gauge on global events, commodity prices, economic data releases. Remember, recession arrives when nobody expects it to arrive.
FRED:T10Y3MLong
by JDS_6ix
SP500 vs Treasury Yields vs Federal Funds RateThe past two times we saw the 3-month vs 10-year treasury yields invert and the Federal Reserve make drastic cuts to the Federal Funds Rate were during the 2000 dot.com bust and the 2008 financial crisis. Each were accompanied by significant stock market declines/crashes. Today we have the 3-month and 10-year yields inverted(two inversions in less than a year) and a return to a period of a declining Fed Funds Rate. Meanwhile stocks have been pushing higher up until recently. An inverted yield curve represents a situation in which long-term debt instruments have lower yields than short-term debt instruments of the same credit quality. The yield curve is a graphical representation of yields on similar bonds across a variety of maturities. A normal yield curve slopes upward, reflecting the fact that short-term interest rates are usually lower than long-term rates. That is a result of increased risk premiums for long-term investments. When the yield curve inverts, short-term interest rates become higher than long-term rates. This type of yield curve is the rarest of the three main curve types and is considered to be a predictor of economic recession. Because of the rarity of yield curve inversions, they typically draw attention from all parts of the financial world. I prefer to use the 3-month and 10-year bond yields and is what is represented in my indicator. The federal funds rate refers to the interest rate that banks charge other banks for lending them money from their reserve balances on an overnight basis. By law, banks must maintain a reserve equal to a certain percentage of their deposits in an account at a Federal Reserve bank. Any money in their reserve that exceeds the required level is available for lending to other banks that might have a shortfall. -A committee of the Federal Reserve sets a target federal funds rate eight times a year, based on prevailing economic conditions. -The federal funds rate can influence short-term rates on consumer loans and credit cards. -Investors also pay attention to the federal funds rate because a rise or fall in rates can sway the stock market. The end-of-the-day balances in the bank's account, averaged over two-week reserve maintenance periods, are used to determine whether it meets its reserve requirements.2 If a bank expects to have end-of-the-day balances greater than what's required, it can lend the excess amount to an institution that anticipates a shortfall in its balances. The interest rate the lending bank can charge is referred to as the federal funds rate, or fed funds rate.
SP:SPX
by PrepForProfit
The Bond Market - Historical Levels We are currently witnessing levels is the Bond Market that have never been seen before. Again today, the US02Y-US10Y have inverted multiple times. The US01M-US03Y have now also inverted. We currently live in a time where debt is out of control and unfortunately there is no end in sight. History shows, within 6-18 months after a US02Y-US10Y inversion, the US economy falls into a recession. The question now becomes, does history repeat itself once again? We all know that the US Stock Market has been on what many would call a parabolic uptrend. Is the US Stock Market at fair value? Or does it at some point return to fair value? That remains to be unknown at this time as all we can do is allow the future to play out. I've currently been working on a script (Pictured Above), that helps me visualize the Bond Market and Yield Curve in a different way. The moves again today have been very interesting. Best wishes, OpptionsOnly
CME_MINI:ES1!
by UnknownUnicorn5129145