I've seen a lot of people on Reddit getting bearish equities and maybe even more jokes about people getting bearish too early. The reason for this could be many but should be the yield curve. With the yield curve inverted, I wanted to share some metrics about what happens when it inverts (goes negative) and reverts back to positive. Below is a table of all US recessions in the last 50 years with numbers on the yield curve inversion that occurred prior and any drawdowns that occurred in the same period.
10Y-2Y (yield curve)
| Inversion | Reversion | Length |
|---|---|---|
| 8/18/1978 | 5/2/1980 | 623 |
| 9/12/1980 | ||
| 10/26/1981 | ||
| 409 | ||
| 12/13/1988 | 3/30/1990 | 472 |
| 2/2/2000 | 12/29/2000 | 331 |
| 6/8/2006 | 6/6/2007 | 363 |
| 8/27/2019 | ||
| 8/30/2019 | 3 | |
| 7/6/2022 | ||
| n/a | 390 | |
US Recessions
| Start | End | Length |
|---|---|---|
| 1/1/1980 | ||
| 6/30/1980 | ||
| 181 |
| |7/1/1981 |10/31/1982 |487 | |7/1/1990 |2/28/1991 |242 | |3/1/2001 |10/31/2001 |244 | |12/1/2007 |5/31/2009 |547 | |2/1/2020 |3/31/2020 |59 | |n/a|n/a|n/a|
S&P 500 Drawdowns
| High Date | High Price | Low Date | Low Price | % Change |
|---|---|---|---|---|
| 2/13/1980 | 118.44 | 3/27/1980 | 98.22 | -17.07% |
| 11/28/1980 | ||||
| 140.52 | 8/12/1982 | 102.42 | -27.11% | |
| 7/16/1990 |
|368.95|10/11/1990|295.46|-19.92%| |3/24/2000 |1527.46|10/9/2002|776.76|-49.15%| |10/9/2007|1565.15|3/9/2009|676.53|-56.78%| |2/19/2020 |3386.15|3/23/2020|2237.40 |-33.92%| |7/26/2023 |4566.75 |n/a|n/a|n/a|
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