Section: Markets

The Sovereignty of the Bond Market

Equity markets trade on sentiment; bond markets trade on math. The continued inversion of the yield curve signals structural pessimism about long-term growth, regardless of what the S&P 500 does in a given week.

Treasury Yield Spreads

The spread between the 10-year and 2-year Treasury notes has been inverted for over 300 days. Historically, an un-inversion (steepening) is the immediate precursor to equity drawdowns.

Date2-Year Yield10-Year YieldSpread (10Y - 2Y)
Jan 20234.40%3.50%-0.90%
Jun 20234.80%3.80%-1.00%
Oct 20235.10%4.90%-0.20%

Yield Curve Inversion Checker

Determine spread and recession probability index.



Spread (10Y - 2Y): -0.40% (Inverted)

Common Mistakes in Market Analysis

  • Equating the stock market with the economy.
  • Ignoring the impact of liquidity drains (QT) on asset multiples.
  • Believing the Federal Reserve can engineer a soft landing with precision.

FAQ: Yield Curves

Why does an inverted curve predict recession?
It indicates that investors expect short-term rates to fall drastically in the future, usually because central banks will have to cut rates to stimulate a failing economy.
What is Quantitative Tightening (QT)?
The process of the central bank letting bonds mature off its balance sheet, effectively removing liquidity from the financial system.

Take Action

The natural next step is obvious. Investigate corporate stock buyback discrepancies on our Investigations desk. →

Internal Navigation & Context

Explore the interconnected impact of these policies across our other reporting desks.

Supporting data visualization