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JPMorgan Says Stock Traders Are Looking at the Wrong Yield Curve

  • Strategists recommend spread between 10-year and 2-year yield
  • JPMorgan remains constructive on stocks, sees 12% gains

Equity investors have been worried about the wrong yield curve, according to a strategist at JPMorgan Chase & Co.

There’s concern that the recent inversion of the yield curve is a sell signal for the market, but critically there’s an average 18-month lag between such a move and the onset of a recession, Mislav Matejka said in a note to investors Monday. The strategist recommends looking at the spread between the 10-year and 2-year Treasury yields -- which is about 18 basis points away from inversion -- instead of using the inverted 10-year and 3-month Treasury yield difference that has stock traders on edge.