Did someone say slowdown? An important historical precedent is emerging which investors should keep a close eye on-it may be another signal that the U.S. is in the late stages of its current economic cycle.
The yield spread between the UST 10YR and 2YR is getting tighter. This yield spread just dropped to a "decisive" new low - and that is a key signal according to Hedgeye CEO Keith McCullough.
Before every recession over the last 40 years, "the yield curve starts to compress, then it goes inverted," McCullough explains in the clip above. "What's happening right now is what happens every time. The market is starting to discount the cycle, and most importantly the end of inflation."
What should investors do when the curve starts to invert?
Watch the full clip above for more.
Mr. Keith R. McCullough is the Founder and CEO of Hedgeye Risk Management LLC. He covers the strategy sector at the firm. Prior to founding the firm, Mr. McCullough was a Partner, Portfolio Manager, and Managing Director at the Carlyle-Bluewave Partners hedge fund. Prior to that, he was a Portfolio Manager at Magnetar Capital; a Founder, Managing Partner and Co-Portfolio Manager at Falconhenge Partners, LLC; and Partner, Executive Vice President and Portfolio Manager at Dawson Herman Capital Management. Mr. McCullough got his start as an Institutional Equity Sales Analyst at Credit Suisse First Boston. He is currently co-chair of the NYC Bipartisan Policy Center; he writes regularly for Fortune and Forbes and is the author of the popular book, Diary of a Hedge Fund Manager.