Were hearing a lot about possible recession coming. 12 to 18 months after the un- inversion time line to late 26 to mid 27.
I found this.
Timeline Details
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- Average Lag: Historical studies tracking the normalization (steepening) of the curve show that downturns typically begin within 7 months of the un-inversion. [1]
- Range: The time gap between the curve turning positive again and the start of a recession has historically ranged from as short as 2 months (such as prior to the 2001 recession) to as long as 14 months (before the 1990 downturn). [1]
- Initial Inversion vs. Reversion: While market watchers often cite a 12 to 15 month average lag measured from the start of the original inversion, looking at the subsequent un-inversion often signals a tighter window for near-term economic stress.
Further I found with the S&P can remain profitable at first slowing during later months in one year and a down turn in another.
The S&P 500 historically shows short-term resilience immediately following a yield curve un-inversion, but often experiences mid-to-long-term underperformance as the economy edges closer to a recession. While a yield curve inversion acts as a long-term warning radar, the un-inversion process (when the spread between long- and short-term yields shifts back above 0%) is historically the real “countdown clock” for economic shifts. [1, 2, 3, 4, 5]
Historical data on the S&P 500’s average performance following an un-inversion reveals a distinct timeline: [1]
🕒 S&P 500 Performance Timeline After Un-Inversion
- 3 Months Later: +4.9% average return. The index has historically been positive in 80% of studied cycles during this immediate 90-day window, demonstrating a brief “last gasp” or relief rally.
- 6 Months Later: +2.2% average return. Momentum begins to stall significantly as macro pressures mount.
⚖️ The Underlying Economic Reality
The primary reason the un-inversion period triggers a slower market environment is its strong historical correlation with the onset of recessions. [1]
- The Recession Lag: Historically, a recession begins an average of 7 months after the yield curve un-inverts.
- Historical Extremes: Performance can vary wildly depending on whether the economy achieves a “soft landing” or enters a severe crisis. For example, the S&P 500 posted a massive +23.1% 12-month gain following the 1980 un-inversion cycle, but suffered a steep -17.3% drop over the 12 months following the 2001 un-inversion as the dot-com bubble unraveled. [1, 2]
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