Market Extra: The longer the U.S. Treasury yield curve stays inverted, the better it predicts recession, analysts say

While a recession has not always followed an inversion of the U.S. Treasury yield curve, the length of time that short term yields remain above long term returns may matter more, analysts say.

Investors across Wall Street have nervously eyed the recent inversion of the yield curve as the U.S. administration’s global trade war has undermined business confidence and manufacturing activity, casting a cloud over the longest U.S. economic expansion in post-war history.

The 3-month Treasury bill sits 21 basis points above the 10-year note yield, which is trading at around 2.03%, Tradeweb data show. The short-term maturity has traded above 10-year yields since May 22.

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