Treasury 1-to-10 Year Spread Is Best Recession Tool: Wells Fargo
- Investors should look for four straight weeks of inversion
- Wells Fargo sees positive slope to remain well into 2019
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With the financial world fixated on a U.S. yield curve close to inversion, the 1- to 10-year yield spread is the one investors should focus on, according to Wells Fargo Investment Institute.
That curve’s predictive power as a recession warning is better than others of different maturities, Wells Fargo said in a report last week. However, investors should look for four consecutive weeks of inversion and/or at least 25 basis points of differential before concluding the yield curve has meaningfully inverted, it said.