• Eran Peleg, CIO

It Ain’t Inverted Till It’s Inverted

Eran Peleg, CIO September 13, 2018


There has been much discussion about the slope of the US yield curve. And for a good reason -- the yield curve has flattened considerably in recent years and is now only slightly positively-slopping. An inverted (negatively-slopping) curve, if we were to get there, has historically been a good predictor of economic recessions. Therefore, the concerns are legitimate, the risk is real.

Having said that, the curve is still positive and has yet to invert. Furthermore, looking at history, the yield curve can remain in its current, slightly positive, shape for an extended period. See, for example, the period in the mid-1990s where the slope between the 30-year and 5-year Treasuries stayed in the 20-50 bps range for around two years (1996-1998). During this period, the US economy continued to boom.


Bottom line: It Ain’t Inverted Till It’s Inverted.