Recession Red Flag Rears Its Ugly Head - Treasury Yield Curve Crashes To Post-Crisis Flats

Tyler Durden's picture

Probably nothing...

The last two times the spread between 30Y and 5Y Treasury bonds was below 90bps, the US economy entered recession...


And the 2s10s curve is tumbling too - to its flattest since the crisis...


But, but, but, how can a recession be coming with stocks are record highs?


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BigWillyStyle887's picture

Am I the only one that thinks those treasury curve graphs are inconclusive? It took 3 years last time for it to go under its "critical red flag doom fear" line and rise back above it for the "recession" to start. Are we officially starting the 3 year countdown to recession here on zerohedge or is this lazy journalism?

ejmoosa's picture

I do not think you can trust the treasury data at all.  How much manipulation has occured with artificially low rates and the printing of all the paper they need is something we cannot calculate.


Five Star's picture

Commercial and industrial lending growth hasn't been this low outside a recession or just before. Ever

Five Star's picture

Commercial and industrial lending growth hasn't been this low outside a recession or just before. Ever

LawsofPhysics's picture

LMFAO!!!  Still believe in eCONomic growth forever and ever in a biosphere with finite resources I see.  Well, good luck with that!


Dewey Cheatum and Howe's picture

EXACTLY!!! I've been hammering on this very issue for 10 years.

you cannot draw any sane metric evaluations, after the printing started and has never stopped.

Stop all of the useless chart comparitives. they are totally fucking meaningless.

CRM114's picture

Not necessarily.

Although the quantative stuff is all to pot, there may still be some qualitative indicators which remain valid. 

It's extremely hard, if not impossible, to work out which those are from first principles.

So, I am paying attention to any indicators which either reach a turning point or switches positive/negative. I then assess that indicator's data, and compare with my real world experience for the implications.

I have not found one yet.


Bay of Pigs's picture

Recession? When did it end?

The FED is the UST market. Another illusion of demand.

gatorengineer's picture

The Depression is just getting worserer, dont worry it wont be covered in any major news outlet.  Talk to anyone on the street and things suck....

BigWillyStyle887's picture

You'll notice I put the word recession in quotations. You the context of the narrative.

spastic_colon's picture

dont worry....they wont declare it a recession until 3 years after it started.

Hikikomori's picture

You are missing the point, which is that all articles on ZH are there to prove to you that the end of the world as we know it is upon us.

Cash2Riches's picture

You truly can't trust anything Central banks state, nor what the banking elites have to say. Regardless, there are more and more signs everyday pointing to the reality of how sick our global economy is, massive defaults loom on the horizon in 2018.

mily's picture

I would say it's more like we are in 2005

NoDebt's picture

I like your interpretation better.


Bay of Pigs's picture

I can tell you that on the west coast we have another housing boom and bubble just as big as 2005. Prices are even higher now.

Some of us remember warning some folks back then...

ejmoosa's picture

Rate of year over year employment growth suggests to me  that we are more like March 2007.  The sharp decelleration in job growth tells me a recession is imminent(less than one year).

ejmoosa's picture

Stocks are always at highs before a recession and the Fed is always raising rates into a recession.

Nothing new there.

ejmoosa's picture

I am sorry.  I mispoke.  They raise the rates until the economy slows and the recession starts...

YUNOSELL's picture

With better healthcare, the patient can survive much longer on life support now -- much longer than you can remain solvent

Blankfuck's picture

FED RESERVE FUCKERS DID IT AGAIN! multiple offers on housing,OVERBOUGHT EVERYTHING!  i see it clear these FED RESERVE FUCKERS CREATED THIS BUBBLE ALL OVER AGAIN! i will be so happy this time when banks fold to broke! NO MORE FUCKING BAILOUTS FOR THEM!

strangeglove's picture

Top Ten reasons Central Bankers Love Bitcoin

10)it's like Helicopter Money, but you don't need a Helicopter.

Blankfuck's picture


Dr. Engali's picture

Fundamentals in a centrally planned eCONomy crack me up every time they are used. Cue the bear face plant gif here.

Bay of Pigs's picture

Hey Doc, whatever happened to the guy you used to bet a sammich with?

The good ole days at the Hedge, lol.

theblackswancommeth's picture

A.I. are the BTFDers so can this market ever crash? I am starting to have my doubts until someone unplugs the bots.

adonisdemilo's picture

Chickens coming home to roost?

wisehiney's picture

A  B  C

Easy as 1 2 3 

Simple as do ray me


Baby you and me

GoldHermit's picture

tick, tick, tick, tick.......

wintraiz's picture

tock, tock, tock, tock......

TeethVillage88s's picture

it's a 20 backlash against dot com crisis, junk bonds, 911, US unilateral war on terror in like 10 countries, MBS toxic waste, and finacialization of all US manufacturing & services.

wintraiz's picture

That blue dotted line there shows where the analysts at SHEPWAVE called the Trump rally while EVERYONE ELSE was saying the markets would crash.  EMOTION WILL RUIN YOU EVERY DAY. 

LawsofPhysics's picture


Better get to work Mr. Yellen!

wmbz's picture

I just ordered my DOW 30,000 cap! Stawks are on the way to da moon Alice.

Buy now or be priced out forever! The machines have your back.

hanekhw's picture

Eventually that bear WILL get past all those traps and he will wreck havoc.

ludwigvmises's picture

The yield curve is basically saying our future is FKED! Great. Recession likely to happen in next 8-10 quarters. Great again.

surf@jm's picture

No biggie.....

The FED is just reloading the ink in their printing presses.......


katagorikal's picture

Including the end of 2004, surely that should be:

"Two of the last three times..."

Or to focus on the 2005-7 period explicitly:

"The last time the 5s30s & 2s10s
went down through 90 & 77 bps from above,
there was a 3 year boom."