Deepest bond yield since Volcker suggests hard landing

Bloomberg/Michael Mackenzie and Liz McCormick/3-7-2023

“As a result, the closely-watched spread between 2- and 10-year yields this week showed a discount larger than a percentage point for the first time since 1981, when then-Fed Chair Paul Volcker was engineering hikes that broke the back of double-digit inflation at the cost of a lengthy recession. A similar dynamic is unfolding now, according to Ken Griffin, the chief executive officer and founder of hedge fund giant Citadel.”

USAGOLD note:  We should keep in mind that there is a lag between the time the yield curve inverts and the onset of a recession. We made the chart below interactive for those who would like to take a closer look at the lag times.