It has been the view that the inversion of the yields curve as good as you get leading indicator of a recession. If the curve inverted, there will be a recession. It is just a matter of time, but timing is one thing that you cannot always control. You can look at the 10-year / 2-year inversion or the 10-year /3-month spread and get the same answer, the recession arrival is not always just around the corner.
For the 10-year / 2-year spread, the range is between 159 and 705 days with an average of 325. For the 10-year/ 3-month spread the range is between 293 and 684 days with an average of 436 days. Currently the 10-year/2-year, has been inverted for 509 days while the 10-year/3-month has been inverted for 309 days. The tables are from NASDAQ (y-charts) and created on Jun 27, 2023. We calculated the time since inversion as August 23, 2023.
For both inversions, we are not running too late. We are beyond the average for the 10-2 spread, but have not hit the average for the 10-3-month spread. If you are thinking about the recession trade, you may have to wait until we approach 2024.
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