3 and 2 year yield curve inversion

One of our commenters today noted the 2 and 3 year yield curve inverted

Here’s what that looks like, intraday:
click for larger chart


Source: Bloomberg


I can’t say I know what this means . . . any idea?

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What's been said:

Discussions found on the web:
  1. Joe Loserman commented on Sep 1

    I looked at the fed’s historical yields and this happened in 1999 near the end between the 10 & 20. Nothing
    really changed. It also happened with the prior inversions – a minor inversion occurs.

    Bad stuff seems to hit when the 5 & 10 or 2 & 10 really ivnert and stay that way.

    So we’re getting closer every day.


  2. nate commented on Sep 1

    What do you think will happen to stocks when investment in housing slows down?

    The following URL has input on this. Your perspective would be interesting.


  3. Contrahour commented on Sep 6

    Jason Goepfert at http://www.sentimentrader.com had an interesting analysis of the 2-3 year inversion –

    “There were six 2yr/3yr inversions since that time, and five of them lead to an inversion in the 3month/10year, with an average lead time of 55 trading days. But it wasn’t necessarily a good sell signal for equities…between the time the 2yr/3yr inverted and the time the 3month/10year did so, the S&P 500 showed an average return of +2.0%, with the largest loss being -5.9% and the largest gain +15.5%. So while Wednesday’s yield inversion in the middle of the curve may portend an eventual inversion in the 3month/10year spread, it is not a reason in and of itself to sell stocks here. ”

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