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point-alpha 2y ago

When you look a 10ys vs. 2 ys. yield inversion on the bond market ous get a remarkable reliable predictor for a recession. Here you can see this for the US Market. ATM the 10 yr Treasury yield is 80bp below the 2ys! You have to look back to early 80s to a similar one. The gray shadowed areas are official recessions.

Source: St. Louis FED,17th Febr. 2023

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point-alpha 2y ago

Here you see the same inversion rate for German Bonds for a shorter time period. The inversion here is ATM -43 bp, indicating a coming recession. Definitions for a recession vary.