Yields Spread Market Crash Astrology

metalalchemist Updated   
TVC:US10Y   US Government Bonds 10 YR Yield
Yield spreads tighten and also invert leading into a recession and it is only once they start to de-invert that any sizable decline begins once all the durations have been squeezed and there is nowhere else to run/hide for market participants. The 10Y-03M curve is of particular interest compared to 10Y-02Y, which almost always leads to a crash once that cuts above 0.

Current widened spreads suggest there is still time for any black swan event to realize. I would expect long duration to rally in the next 2-3 months to narrow the spread around ~5% range, this can occur with help from TGA refill that's occurring until the end of September. Once at the end of the fall, I think we will see trouble brewing in markets from high rates and short liquidity.

Net-net, equities, and all risk assets can float around until late August/September before any major decline can transpire.
Spreads still considerably widened, and equities can rally into the end of the year.


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