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Treasury yields invert, signalling possibility of recession

FILE - In this July 30, 2019 file photo, trader Gregory Rowe works on the floor of the New York Stock Exchange. An economic alarm bell is sounding in the U.S. and sending warnings of a potential recession. Yields on 2-year and 10-year Treasury notes inverted early Wednesday, Aug. 14, a market phenomenon that shows investors want more in return for short-term government bonds than they are for long-term bonds. (AP Photo/Richard Drew)

NEW YORK — An economic alarm bell is sounding in the U.S., sending warnings of a potential recession ahead.

Yields on 2-year and 10-year Treasury notes inverted early Wednesday, a market phenomenon that shows investors want more in return for short-term government bonds than they are for long-term bonds.

That implies a loss of faith in the soundness of the U.S. economy and it’s been a solid indicator of a coming recession for decades, including the last one that preceded the global economic crisis in 2007.

When a recession might hit, if it does, is a little hazier. Months or even years have passed after an inversion takes place before economists can connect the two.

Major U.S. markets are falling sharply before the opening bell and prices for gold are rising.

The Associated Press