The Bond Yield Curve, which can be calculated by substracting the US 2 Year bond yield from the US 10 Year bond yield, has been inversed for quite some time.

An inversion of the bond yield basically means that bond traders require higher returns on short-term bonds than on long-term bonds, which translates to short-term bonds being more risky than long-term ones. This only occurs when bond traders anticipate an upcoming crisis.

The inversion on itself is not necessarily bearish, but the "un-inversion" is very bearish. As seen on the white chart, once the line crosses the zero line from below, it has always predicted an upcoming crash.

With the Bond Yield Curve recently seeing a strong "bullish" move, it's likely that we're going to hit 0% in the near future. Consequently, this signals that a market crash is on the horizon.

Whether history will repeat remains to be seen. However, we had one of the strongest yield inversions in history, which doesn't bode well.

Do you think that a crash is coming? Share your thoughts and charts.
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