Treasury Field Curve - not out of the woods yet

 And here’s a monthly chart of the Treasury “yield curve”…

This chart shows the difference – or “spread” – in yields on the 10-year Treasury note and the 3-month T-bill.

Normally, the yield curve is positive. The further out in time a bond matures, the higher its yield will be. This rewards investors for the extra time risk.

A negative yield curve is when short-term bills offer a higher yield than long-term notes. And it often happens right before a recession.

The first three red arrows on the chart mark yield curve inversions right before recessions hit.

They also happened right before big stock market falls.

The #1 stock for 2023

When the yield curve reached its most negative levels, stocks were closer to their bull market highs than they were to their bear market lows.

By the time the bear markets ended, in December 2002 and March 2009, the yield curve was well into positive territory. Same goes for the COVID-inspired plunge that bottomed in March 2020.

If history is any judge, we’ll want to see the yield curve go positive before we get the all-clear on stocks.