Hence, despite index’s rebound in the week of July 4-8, it may not be the right time to turn more positive. The rebound that took place last week is a reaction to recessionary fears, which caused the 10-year bond market to rally. As a result, the yields on 10-year US treasuries retreated. This retreat, coupled with a rise in yields of shorter duration treasuries has caused something of an inverted yield curve. This inversion, where the 2-year treasuries yield is higher than the 10-year treasuries yield implies a recessionary phase.
Hopefully, this inversion is temporary. If it is consistent, that would confirm a recession and the STI could go a lot lower than 3,000.
