More than a year after a key part of the so-called Treasury yield curve inverted, it has recently started to steepen, a sequence that many pros on Wall Street still believe could be the true sign of economic trouble ahead. The yield curve inverts when shorter-term Treasury rates rise above longer-term yields. The 2-year and 10-year Treasury yield curve initially inverted in March 2022, a phenomenon that has historically been a reliable recession predictor.
"It's usually about 14 months to maybe 18 months after the 2s 10s inverts." The notable bond investor said when the yield curve de-inverts, it's a strong signal of a recession and that it was very close to happening. EvercoreISI historical work found that the yield curve turns positively sloped just before a recession begins.