The headlines and TV pundits have been screaming about the terrors of the inverted yield curve. After the yield on the 2-year U.S. Treasury note rose above the 10-year last Wednesday, a mini-panic ensued. Equity markets fell about 4% at one point after the 2-yr-10-yr US yield curve went negative, but have since recovered (see page 1).

It’s the newest thing and bad news sells, of course, and it sells well. But what if the bad news is a head fake or just plain uninformed? A look at history often gives investors the context needed to make a knowledgeable decision.

This is the third panic in markets as the US curve experienced various inversions, going back to the fall of 2018, just before the Christmas bear market. There was an inversion of the 1-year-5-year curve in November, when the market fell 16%, and then the 3mos.-10-yr inversion last March. The market lost 3%. Now you have the twos and tens inverting. The great market freak-outs over yield curve inversions are highlighted below.

Inverting curves are not associated with normal circumstances. I get that this is a potential issue. Obviously, there is something troubling markets, evidenced by not only the widening inversions in the U.S. treasury yield curve but the widespread negative rates outside the U.S. (more tha...

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