It was a year ago on July 6 that the 2-year to 10-year Treasury yield curve inverted, which would typically be taken as a sign of a coming recession even if around for a much shorter time. But Monday, July 3, brought an additional portent, as the 108-basis point difference hit the widest gap since a 109.5 percentage point difference one day in 1981, as Reuters reported.
Those old enough to have been in business at the time might remember the massive inflation and the federal funds rate eventually nearing 20%.
Things have not reached that point yet today, although it is worth noting that on June 14, 2023, when the Federal Reserve announced a pause in the long run of rate hikes it had pursued, the 2-and-10-year gap jumped to 0.91, still a wider gap than has been seen since the inversion started last year.
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