The Bond Market’s Recession Signal Is the Loudest in 40-Plus Years

The U.S. Treasury yield curve recently inverted to a point that hadn’t occurred since the early 1980s, signaling that a recession is on the way.

Yields on short-dated debt are usually lower than those on securities maturing over longer periods because investors demand higher yields to cover the risk of holding the debt for longer. But on Tuesday morning, the

2-year Treasury

‘s yield was 4.46%, compared with 3.70% for the

10-year

note, a spread of about 76 basis points, or 0.76 percentage point.