I wanted to take a moment to clear up confusion and clarify some things about the yield curve, and what it means at this juncture for the stock market and other risk assets.
When looking at the yield differential between the longer-term yields (10-year Treasury note) and the 2-year yield, you’ll see an inversion of more than -100 basis points.
That’s basically -1%.
So if long-term yields were yielding almost 1% less than the 2-year yield, then this phenomenon is called the inversion of the yield curve.
People usually take this as a sign that we’re heading towards a recession and a stock market crash is inevitable.
But that’s not the case here.
Here’s what’s actually going on in the market, and when investors should begin to worry…
In today’s 3-minute video, I explain when things will begin to get worse for risk assets, warning signs to be on the lookout for in yields (for when things will begin to get problematic) and when the equity market will likely start to come down.
I release these weekly tips every Thursday for free, so stay tuned and stay subscribed here.
Editor of 11-Day Trader