EXPLAINER: Why bond yields may be warning of a recession

By STAN CHOE
AP Business Writer

NEW YORK (AP) — One of the more reliable warning signals for a recession is starting to shine. The “yield curve” is watched for clues to how the bond market is feeling about the U.S. economy’s long-term prospects. On Friday, a closely followed part of the yield curve lit up again after giving a brief signal earlier in the week. The yield on the two-year Treasury once again topped the 10-year yield. It’s the reverse of what’s usually the case, and it’s what market watchers call an “inverted yield curve.” Other, perhaps more important parts of the yield curve are not inverted, but the trend seems to be swinging toward pessimism.