The inversion of the yield curve: Still a reliable indicator of recession?

While it is true to say that every recession has been preceded by an inversion of the yield curve, it is also true that not all inversions have led to recessions. That aside, we are tempted to say that this time it is different. Famously the most dangerous words in investing but fitting, we think, at least as far as this latest US inversion is concerned. Typically, yield curves invert because shorter-term yields spike due to central bank action to choke off inflation, while longer-term rates stay relatively stable. This time both US 2-year yields and US 10-year yields fell sharply, with ...