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Why this U.S. recession signal is probably throwing off a false alarm

November 20, 2017

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A historic marker used by Wall Street to determine if a recession is coming is flashing red, but there’s probably no need to worry for now about the U.S. economy.

What’s caught the attention of investors is a flattening of the yield curve that usually occurs right before a recession. The last time the yield curve was this flat was 10 years ago, shortly before the onset of the Great Recession.

The yield curve is just a fancy Wall Street term to describe the difference in interest rates on long-term and short term government Treasurys, in this case the 10-year and 2-year notes.

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