Recession warning flashes as 2- and 10-year yields invert for first time since 2019

• The 2-year and 10-year Treasury yields briefly inverted Tuesday for the first time since 2019.
• The flip is the latest warning after another part of the bond market briefly inverted Monday.
• Inversions have historically been predictors of sharp economic slowdowns in the US.

The US bond market flashed another key warning that a recession could be coming as the the 2-year Treasury yield briefly surpassed that of the 10-year note for the first time in almost three years.

The flip is the latest debt-market recession signal after another part of the yield curve briefly inverted Monday for the first time since 2006. 

In Tuesday's inversion, 2-year yields jumped as the 10-year rate fell, converging around 2.39%, Bloomberg reported. Later in the day, the 2-year yield retreated to 2.36% and the 10-year rate hit 2.41%.

The last time such an inversion occurred was in August 2019 amid the US-China trade spat. Before that, it was from 2006 to 2007, leading up to the global recession. As for Monday's flip, the 5-year Treasury yield exceeded that of the 30-year.

Inversions have historically foreshadowed economic slowdowns in the US with the 2- and 10-year inversion predicting 10 of the last 13 recessions, Bank of America said. One analyst told Bloomberg any impending slowdown could still be two years away, but it's difficult to say for sure.

Other experts have been iffy about the inversion indicator, saying the Federal Reserve's interventions in the bond market make the metric a less reliable predictor. 

The Fed, for its part, may be hiking interest rates more aggressively than predicted this year. The central bank already bumped the federal funds target rate by 25 basis points to between 0.25% and 0.5% earlier this month, and Citi thinks it will keep raising rates by 50 basis points at its upcoming four meetings.