The market's favorite recession indicator has been wrong twice since 1950. Here's why some investors say it's flashing a false positive again.

A yield-curve inversion has preceded every US recession since 1950. But not every instance of inversion was followed by a recession. In fact, the popular signal — which flashes when the two-year Treasury yield tops the 10-year — has been wrong on at least two occasions since 1950. Some investors think the current yield curve inversion could be yet another false-positive. If the Federal Reserve keeps easing monetary conditions and a trade resolution is reached, it could un-invert.

A yield-curve inversion has preceded every US recession since 1950. But not every instance of inversion was followed by a recession. In fact, the popular signal — which flashes when the two-year Treasury yield tops the 10-year — has been wrong on at least two occasions since 1950. Some investors think the current yield curve inversion could be yet another false-positive. If the Federal Reserve keeps easing monetary conditions and a trade resolution is reached, it could un-invert.

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The market's safest assets are offering investors record-low returns — and it's left them no place to hide from recession fears'It's certainly scary when you see yields fall so sharply, and when you see the yield curve inverted,' said Collin Martin of Charles Schwab.
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