There’s Hope: “After the yield curve inverts — here’s how the stock market tends to perform since 1978”
August 22, 2019
“Wall Street’s most widely watched gauge of the yield curve’s slope, the spread between the 2-year Treasury note yield and the 10-year inverted Wednesday morning, flashing the clearest signal to date that the U.S. is set to face an economic recession, but that doesn’t have to mean doom and gloom for stock investors…
On average, the S&P 500 has returned 2.5% after a yield-curve inversion in the three months after the episode, while it has gained 4.87% in the following six months, 13.48% a year after, 14.73% in the following two years, and 16.41% three years out, according to Dow Jones Market Data (see table below):..
On top of all that, a yield-curve inversion, doesn’t instantly result in an economic recession. From 1956, past recessions have started on average around 15 months after an inversion of the 2-year/10-year spread occurred, according to Bank of America Merrill Lynch…”