The telltale sign of an impending recession is an inversion (short-term rates are HIGHER than long-term rates) of the 30-year yield vs. the 10-year yield spread.
Historically, the stock market and the economy remain healthy as long as the yield curve is STEEP and NOT inverted.
However, when the yield curve becomes inverted, as it was in 2000 - 2001 and 2007 - 2008 (note the yellow shaded area on graph), the economy and the stock market typically take a bear-market beating within 6 months of the inversion.
Normally, 30-year bonds yield more than 10-year bonds as a function of people wanting to get paid for not being in riskier assets. But when the 30-year yield collapses below the 10-year yield, watch out!
While 30-year yields have been coming down, and the spread is narrowing, we're nowhere near inversion at present.
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