Analyst: The end of the yield curve inversion signifies the real arrival of economic recession

PANews reported on August 5th that Forexlive analyst Adam Button stated, since 1955, the yield curve inversion has maintained a good record in predicting US economic recessions. However, it's not the inversion of the curve that truly signals an impending recession but rather when the curve reverts to normal. We can think of this as a storm forecast: an inverted yield curve indicates a forming storm while its normalization signifies landfall, especially during bull steepening periods dominated by short-term rates. We won't see a recession before data shows one, but markets are definitely contracting. Besides the slope of the yield curve, there was also a drop in two-year U.S Treasury yields by 20 basis points which is nominally lower than Federal Reserve funds rate by 170 basis points - something unlikely to happen without real economic issues.

Previously reported by this media outlet was that for the first time since July 2022, U.S two-year treasury yields fell below ten-year treasury yields ending their inversion.