What's Inverted Mean?

[Louetta]

Seems to me that in listening to CNBC they interpret an inverted yield curve as being when the yield on the 2-yr is above the 10-yr, and say the curve is not now inverted because it has not CLOSED with the 2-yr above the 10.

But the treasury yield data

https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield

shows that the rate is monotonically DEcreasing from the 1-month out thru 5 years. Then it picks up enough so the 10-yr is (barely) above the 2-yr. But it's not above the 1-yr, for example. If you draw it out on paper it sure looks inverted.

[mrmarket]

Seems to me that in listening to CNBC they interpret an inverted yield curve as being when the yield on the 2-yr is above the 10-yr, and say the curve is not now inverted because it has not CLOSED with the 2-yr above the 10.

But the treasury yield data

https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield

shows that the rate is monotonically DEcreasing from the 1-month out thru 5 years. Then it picks up enough so the 10-yr is (barely) above the 2-yr. But it's not above the 1-yr, for example. If you draw it out on paper it sure looks inverted.

Whether or not it actually inverted....it's close enough to be inverted....which is generally not good.

[Louetta]

Look at this URL:

https://fred.stlouisfed.org/series/T10Y2Y

and click on where it says MAX in the string 1Y 5Y 10Y Max and there is an excellent display going back to like 1975 showing how recessions have followed the inversions but the inversions have lasted months. And then the spread goes quickly much higher which I really don't understand unless it's the results of Fed easings. Probably is.