A Recession Signal Is Flashing Red. Or Is It?

Two years ago, the inversion of the yield curve—shorter-dated Treasurys yielding more than longer-dated bonds—was taken by investors as a surefire sign of recession. Now Wall Street worriers have a new concern: The yield curve is back to normal, a surefire sign of recession.

It might seem odd, but both yield-curve moves are indeed good signs of recession, though not foolproof ones. What really matters is why Treasurys move as they do, and in this case it comes down to the Federal Reserve.