Philotimo Wealth Management

Ten year-two year Spreads around the World

Click the link above to read the full article.

The author of this article is Menzie Chinn of the Econbrowser blog. He is the Professor of Public Affairs and Economics at the University of Wisconsin, Madison. Very quick and technical article here, sharing a few charts and commentary.

A bit of background, a ten year - two year spread is the difference between the 10 year treasury rate and the 2 year treasury rate. A negative 10-2 yield spread has historically led to a recessionary period. As the author attempts to point out with the charts, although it has a successful prediction rate, the inversion historically occurs 6-24 months before the recession and thus considered a far-leading indicator.

The 10 year - 3 month spread going negative is also a recession indicator. It is not currently negative as you can see in the chart. It is considered the same a far-leading indicator.

All that being said, there are plenty of indicators out there, and unfortunately no one is perfect. The most important thing clients can do generally is to have a plan and invest in a diversified portfolio.

The article linked and mentioned above was published April 3, 2022 and written by Menzie Chinn. You can follow the blog EconBrowser here.

This article was prepared by CJ Stevens and Jerry Kallitsis who are both mutual fund representatives with Investia Financial Services Inc. This is not an official publication of Investia Financial Services Inc. The views expressed in this article are those of the author alone, and are not necessarily those of Investia Financial Services Inc. The content is for informational purposes only, you should not construe any such information as legal, tax, investment, financial or other advice. All content on this site is information of a general nature and does not address the circumstances of any particular individual or entity.