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Inverted Yield Curve Is No Death Sentence for Stock Market

  • Stocks kept rising after all but one inversions since 1950s
  • S&P 500 gained a median 21% over 19 months before peaking
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Flatter Yield Curve Is Not Cause for Alarm, Says AllianceBernstein's Gibson
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The hand wringing among stock investors over an inverted yield curve is overblown, if history is any guide.

So says Canaccord Genuity’s strategist Tony Dwyer, who has studied equity-market performance after the payout of long-term Treasuries fell below that of short-dated government debt. Such inversions have occurred seven times since the early 1950s and all but one preceded equity gains. Specifically, the S&P 500 Index rose a median 19 months before peaking after an inversion, with returns reaching 21 percent.