2-10 Spread Collapse: U.S. Economy's Check Engine Light Flashes Red

Mar 7, 2022

2-10 Spread Collapse:

U.S. Economy’s “Check Engine” Light Flashes Red

Gold hits $2000 as “real yields” free fall…

The spread between the 2 YR and the 10 YR Treasury has investors spooked. But it's the difference between the Fed Funds rate and the 2-year Treasury that should worry investors the most.

Understanding both is the key to understanding why a recession is imminent and the Federal Reserve is powerless to stop it.

“If your check engine light ain’t on by now, your lightbulb is burnt out.”

― Adam Baratta

Today the Dow Jones collapsed 800 points, the Nasdaq fell into a bear market closing the day down 20% off its all-time highs, and gold prices soared to $2000 per ounce.

Why?

It’s all because of the 2-10 spread.

This bond yield spread is signaling an inverted yield curve, and that signals a recession. Not just some of the time, but all of the time over the last 50 years.

We know most people’s eyes glaze over when they hear terms like “bond spreads” and “yield curves.” But understanding these basic concepts are the key to understanding where we are in the markets, why a recession cannot be avoided, and how the Federal Reserve is powerless to stop it.

Don’t worry. We have put together an easy-to-understand 4-page infographic that explains it all.

Read Now

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Best,

Adam Baratta

Editor-in-Chief

Brentwood Research