Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Stocks

About That Yield Curve Inversion

by October 18, 2022
October 18, 2022
About That Yield Curve Inversion

In March 2021, lending money to the US Government for ten years would give you a return of around 1.7%/ann over the next ten years. Lending money to the government for 2 years at the same time, would give you roughly 0.1%/ann for the next 2 years. Which makes sense as one would require a bigger reward for lending out money for a longer duration vs. a shorter duration.

The difference between these 10- and 2-year yields (on Govt bonds) at the time was 160 Bps (1.6%). This represents a “normal” steep shape of the yield curve shown in the lowest curve in the graph above.

Since then, the Yield curve has flattened en eventually became inverted. The yield on 2-year bonds is now higher than on 10-year bonds. That is shown in the highest of the two curves. The difference between 10- and 2-year bonds has now shifted to minus 43 Bps.

It is clearly visible how the higher curve is much flatter than the lower curve. The process leading to that change is called the flattening of the yield curve. Here is the animated version.

The chart above shows this difference between 10- and 2-year yields plotted on a standard price-time graph since 1990.

The grey line is the actual difference, the solid blue line is the 12-month moving average and the blue bar chart is the S&P 500 index.

It is hard to pinpoint exact dates or moments, but the big picture shows three major yield curve inversions over the last 30 years (big red ovals). Every time the yield curve started to steepen again and rise back above 0, the S&P either started to decline or continued/accelerated a decline that had already started.

Despite the fact that the market ($SPX) seems to be improving somewhat at the moment, this is one of the observations that keeps me from getting overly bullish at this point.

–Julius

0
FacebookTwitterGoogle +Pinterest
previous post
BREAKING HUGE: Former Democrat Tulsi Gabbard Endorses Kari Lake For AZ Governor, Slams The “Warmongering Elitist Cabal” And “Propagandists In The Mainstream Media”
next post
WATCH: CNN Actually Calls Katie Hobbs Out For Refusing To Debate Kari Lake And Supporting UNLIMITED Abortion – Hobbs Says Kari Lake Is “Afraid Of Of Talking To Voters”

You may also like

Technical Indicator Showdown: MACD vs. PPO vs. PMO

May 24, 2024

2022 Q2 Final: Earnings Have Peaked

October 13, 2022

How to Trade Gaps Up (and Down) After...

October 25, 2024

Complete Trader: Macro to Micro and Top Picks...

June 23, 2023

Only One Group Has Shown Consistent Relative Strength...

January 18, 2025

Why are Higher Interest Rates a Big Deal?

November 7, 2023

Opportunities in Industrials and Materials

September 27, 2024

Why the NAAIM Exposure Index Matters to Your...

February 7, 2024

How Would YOU Rank the Magnificent 7 Stocks?

March 19, 2024

Navigating Tariffs: Master the Charts to Outsmart Market...

March 6, 2025

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Starmer accused of betraying farmers as British food pledge stalls

      August 22, 2025
    • Fed rate cut looms after Powell’s Jackson Hole speech

      August 22, 2025
    • Tariff “Inclusion” Process Comes with High Costs, Absurd Outcomes, and Extra Cronyism

      August 22, 2025
    • Trump DOJ releases ‘thousands’ of Epstein files to House Oversight Committee

      August 22, 2025
    • Jackson scathing dissent levels partisan charge at colleagues after high-profile ruling

      August 22, 2025
    • ‘Leftist’ taxpayer-funded academy sparks backlash after moving against Trump’s rollback of key regulation

      August 22, 2025

    Categories

    • Business (8,857)
    • Investing (2,235)
    • Politics (16,464)
    • Stocks (3,228)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved