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The Wall Street Journal: The Bond Market's Most Powerful Recession Indicator Is (Finally) Flashing Red

October 26, 2022
Recession Market Crash

Article by Eric Wallerstein

Will the Federal Reserve successfully prevent the economy from skidding into the R-word? It’s up for debate, but an important recession indicator from the bond market is flashing red.

The spread between yields on the three-month U.S. Treasury bill and the benchmark 10-year note has inverted several times since Tuesday's trading session. Inversions have preceded both the 2008 financial crisis and the Covid-19 crash, and haven't been seen since March 2020.

"Nothing is sacrosanct, but [the inversion] does have a very strong predictive value," said Quincy Krosby, chief global strategist at LPL Financial...

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