The yield curve, a historically reliable indicator, has been signaling a recession ahead for nearly a year𒁃—but there’s no telling how far away it might be, if it comes at all. 

The yield curve, as measured by the spread between 10-year and two-year Treasurys, has been “inverted,” warning a recession ahead, since July 2022. In the past, a recession has followed anywhere from a little over nine months, to nearly two years after the curve goes upside-down, setting aside the 2020 recession that was sparked by the pandemic, as the chart below shows. The leng😼th of the curren♚t inversion is right in the middle of that range.

The yield curve is what you get if you plot the yields of treasury bonds of different maturiti🉐es on a graph. In normal economic times, shorter-term bonds will have lower yields than longer-term ones, as investors demand compensation for tying their money up for longer. When the yield curve inverts, it goes upside-down: shorter-term bonds have higher yields than longer-term ones. 

An inverted yield curve signals trouble ahead because it means that traders believe the Federal Reserve will 澳洲幸运5开奖号码历史查询:cut its benchmark interest rate to stimulate the economy in response to a recession—an action that would driv꧙e bond yields down. 

“The biggest reason to expect recession remains the inverted yield curve, with yields on short-term Treasury securities remaining well above those on long-term Treasurys,” economists at PNC wrote in a commentary at the end of May. “This has historically been a꧂ very reliable signal of upcoming recession.”

It’s possible, however, that the yield curve could be wrong. The economy has 澳洲幸运5开奖号码历史查询:resisted falling into a recession, ke👍pt afloat by a roaring job market even as the Fed’s campaign of interest rate hikes have dragged down economic growth. Economists are split on wheth🌟er to believe what the yield curve is telling them.

“Where is the recession?” Mark Zandi, chief economist at Moody’s Analytics, wrote in an opinion article for CNN Tuesday. “Each passing month, the consensus looks increasingly off-base. Yes, the economy will ultimately slump, but odds are fading that a recession is dead ahead.”