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?
3 and 2 year yield curve inversion
August 31, 2005 7:30pm by Barry Ritholtz
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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.
-Joe
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.
http://tinyurl.com/97bhe
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. ”