Bond Market Not Signaling Recession, Experts Say

Despite good US economy, markets expect a more aggressive move by the Fed if global weakness and trade concerns persist

Traders work after the opening bell at the New York Stock Exchange at Wall Street in New York City, on Aug. 15, 2019. JOHANNES EISELE/AFP/Getty Images

WASHINGTON—U.S. stocks dropped sharply on Aug. 14, as the bond markets signaled concerns about a possible recession with the yield curve inverting for the first time in 12 years. The inverted yield curve, however, isn’t an indicator of recession in the current market environment, according to experts.

Investors pushed the panic button after the main yield curve briefly inverted, meaning the yield on the closely watched 10-year U.S. Treasury bond fell below the yield on the 2-year note for the first time since 2007.