By Dustin Giannangelo
CEO Fusion Wealth Management
The 3-month and 1-year Treasuries just inverted with the 10-year Treasuries. Historically, this has been a predictor of a looming recession.
When a yield curve inverts, it means the shorter end of the curve like the 3-month Treasury bills now has a higher yield than the 10-year Treasury bills, which has not happened since 2007.
A yield curve inversion is the bond market’s way of saying there is a potential recession on the horizon.
Should investors start panicking and selling their stocks?
The short answer is no. As the chart below shows, the S&P 500 has outperformed the average stock market return the previous three times the 2-year/10-year yield curve has inverted. On a final note, the 2-year and 10-year treasuries have yet to invert since the Great Recession.
Here are 5 Facts You Need to Know About Inverted Yield Curves:
Past performance is no guarantee of future results.
S&P 500 Index is an unmanaged group of securities considered to be representative of the stock market in general. You cannot directly invest in the index.
Forecasts are inherently limited and cannot be relied upon.
The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra IS or Kestra AS. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by Kestra IS or Kestra AS for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.
Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Fusion Wealth Management is not affiliated with Kestra IS or Kestra AS.
Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Fusion Wealth Management, LLC is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice and are not Certified Public Accounting (CPA) firms. FINRA's BrokerCheck