The second source of the earlier pessimism had to do with a so-called “inversion” of the yield curve. A clear recession signal then waited until 2000, when the 10-year yield fell more than 50 basis points below the 1-year yield for a number of months before the mild 2001-02 recession took shape. Indeed, on that basis, those who rely on the yield curve signal would have been calling an “all clear” just before the 2008-09 great recession began. It looked back some 60 years at cycles and found guidance on interpreting the yield curve and finding verification in other indicators to make more accurate recession calls. It can confirm a recessionary signal from yield curve inversions with the same 10-18 month average lead time.

Source: Forbes May 20, 2019 11:26 UTC