Bond market ‘yield curve’ returns to normal from inverted state that had raised recession fears

The relationship between the 10- and 2-year Treasury yield briefly flattened Wednesday, reversing a classic recession indicator.

Following economic news that showed a sharp decline in job openings and dovish remarks from Atlanta Fed President Raphael Bostic, the benchmark 10-year yield inched above the 2-year for the first time since June 2022.

An inverted yield curve, in which the nearer-duration yield is higher, has signaled most recessions since World War II. The reason why shorter-duration yields rose above their longer-duration counterparts is essentially the result of traders pricing in slower growth out into the future.

However, a normalization of the curve does not necessary signal good times ahead. In fact, the curve usually does revert before a recession hits, meaning the U.S. could still be in for some rough economic waters ahead.

This is breaking news. Please check back for updates.