For the Panicked: A Closer Look at the Last Few Inversions (1989-2009)

by WhenLuggageAttacks

 

Since some people are panicking about the 10 & 3 Treasury yield rates inverting, I thought it might be helpful to review history so people can get a sense of the time scale involved in these sorts of things.

You can follow along here:

fred.stlouisfed.org/series/T10Y3M

www.tradingview.com/symbols/SPX/

Please note, I’m eyeballing this from the charts above. All values and dates are rough estimates.

1989:

The yields invert in late March 1989. They bounce around for the next 9 months until the end of 1989.

The S&P hit 290 in late March 1989. By October 1989, it hit 360. S&P then dipped to 320, then hit 370 by July 1990. The recession officially begins that same month. The S&P then dips to 300 and regains its value to 370 by February 1991 (roughly six months). Recession ends a month later, March 1991.

1998:

The yields invert in September. They bounce a few times over the next month.

S&P is volatile, but there is no net loss/gain. No recession.

2000:

The yields invert in April 2000. They bounce for the next 10 months until February 2001.

The S&P was at 1350 when the yields inverted. S&P hits 1520 in late August 2000 (a high it reached in March 2000, before the inversion). S&P would then begin a slow and volatile decent (four months after the initial inversion), dipping to a low of 800 by late September 2002. The recession officially began March 2001 and ended November 2001.

2006:

The yields invert in January 2006. They would bounce for 19 months, until mid August 2007.

The S&P was 1280 in January 2006 (when they first inverted). By October 2007, the S&P hit 1560 (a couple of months after the inversion ended). S&P then began a mostly slow decent down. The recession officially began a couple months later in December 2007. The S&P dipped to a low of 670 around March 2009. Recession ends June 2009.

 

 

Disclaimer: Consult your financial professional before making any investment decision.

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