According to one of the best predictors we have, the next recession could start as early as November 2020.
You've likely heard all about the "yield curve" in the financial media. In fact, we've talked a lot about a yield curve inversion here at Money Morning. In short, an inverted yield curve is when the 10-year Treasury yield falls below the two-year Treasury yield, and it's one of the best predictors of a recession we have.
In a healthy economy, the 10-year yield should always be higher since investors have to wait longer for it to mature. That's why it's a very bad sign when the 10-year yield drops below the two-year yield.
A recession has followed every time that's happened.
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But while you know a recession has followed every yield curve inversion, you might not know how long it takes to happen.
And since that could happen soon, we wanted to make sure you knew exactly what to expect...
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The yield curve could invert any day now.
The current two-year yield is 2.5%, while the 10-year yield is 2.66%. A minuscule drop of 0.17% in the 10-year yield would invert the curve. That's more than plausible since yields on the 10-year are down 0.28% over the last year.
If the Fed hikes rates again or unloads its balance sheet quicker than expected, the yield could drop even faster.
But an inversion doesn't mean a recession will start right away.
Bloomberg found it takes an average of 627 days from inversion to recession. That means if the yield curve inverts this month - a distinct possibility - the next recession could start in November 2020.
Take a look...
Knowing this could give you a leg up on the market too. It's very likely a stock sell-off will follow a yield curve inversion, but you'll know the real trouble is most likely to hit nearly two years later.
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