Deutsche Bank on the 100bp US yield curve inversion: in all such occurrences ... recession

I posted on the huge inversion of the 2/10 UST yield curve Yield Curve A yield curve is a line used to help determine interest rates of interest rates for a specific bond, differentiated by contract lengths. This is useful for contrasting maturity dates, for example 1 month, 1 year, etc.In particular, yield curves help underscore the relationship between interest rates or borrowing costs and the time to maturity.Some of the best examples of this include US Treasury Securities, which are among some of the most observed worldwide by traders. By determining the slope A yield curve is a line used to help determine interest rates of interest rates for a specific bond, differentiated by contract lengths. This is useful for contrasting maturity dates, for example 1 month, 1 year, etc.In particular, yield curves help underscore the relationship between interest rates or borrowing costs and the time to maturity.Some of the best examples of this include US Treasury Securities, which are among some of the most observed worldwide by traders. By determining the slope Read this Term here:

US yield curve inversion, the recession indicator, is its deepest in 40+ years

Deutsche Bank on this:

• Last night the US 2s10s curve closed below -100bps for the first time in 42yrs.
• We have monthly data back to the early 1940s and there have been only 7 monthly closes below -100bps. So a real rarity.
• In all such occurrences (1969, 1979, 1980 and 1981) a US recession has either been underway, or has occurred within a maximum of 8 months.

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DB provides an 'in a nutshell' explanation on why YC inversion is not positive for the economy:

• Intuitively, when yields on short-end money are competitive with longer duration risk assets, there should be more circumspect investment behaviour with animal spirits slowly draining away. The front-end should become more attractive to the detriment of riskier ventures out the curve. This is why we think an inverted curve is such a good predictor of the economy over subsequent quarters.

Also, if its all voodoo to you, check out this video explanation from the Wall Street Journal. Note that its from a few years ago so the discussion in it of current events is outdated. The theory is the useful bit.