Economists like to watch the 2-10 spread because that is one of the most reliable recession indicators.
Seemingly, inversions are far away, but that is mostly an illusion.
The 2-10 spread has been sinking like a rock. That spread was 1.58 percentage points on March 19, 2021 as shown in the lead chart. It’s now down to 0.61 percentage points.
If the Fed gets in as little as two hikes, the 2-10 spread will invert as it typically does before a recession.
Of course, the 10-year yields may keep rising, but the problem is 2-year yields have risen faster.
Author(s): Mike Shedlock
Publication Date: 8 Feb 2022
Publication Site: Mish Talk