Key Points:
Yield curves (either 10-year versus 2-year, or 10-year versus 3-month) are very accurate at predicting recessions (blue shaded regions).
Both curves being inverted is the likely signal. 10-year versus 30-year is still 90bps away, even though 10-year versus two-year is just 20bps away.
Steepness is acceptable for economy, corporate profit cycle, forward market gains for now. If the Fed signals a pause, they may be able to keep it from inverting. But if current trend of sideways 10-year yield and steady 2-year/3-month yield gains continues as Fed hikes continue, then it will invert.
All clear signal for the market currently. Long-term leading sectors Retail, Tech, and Healthcare are re-accelerating, and industrials are picking up strength. Many more actionable growth names (buyable–green), while a few are extended and can be trimmed (light red).
