Yield curve inversion warrants caution, not panic

Mildly inverted yield curve not as strong or pure a recession signal as in previous cycles

An inversion in the three-month to 10-year segment of the US Treasury yield curve is widely taken to be one of the most reliable signals of an impending recession.

Late last month, an inversion occurred for the first time since the great financial crisis - and this set off alarm bells, triggering the sharpest single-day correction in the S&P 500 Index in 11 weeks.

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A version of this article appeared in the print edition of The Sunday Times on April 07, 2019, with the headline 'Yield curve inversion warrants caution, not panic'. Print Edition | Subscribe