The Second Sign

The second major sign of an impending recession comes from the bond market. It is called an "inverted yield curve." It is one of the oldest omens of a bond market recession. This is a longer-term recession signal.

The yield curve of US Government bonds inverted late last year and remained out of kilter well into the first half of 2007. Usually, long-term rates are higher than short-term rates. In this scenario, the opposite is true.

Every recession in the past 50 years has been preceded by an inverted yield curve. But remember -- not every inverted yield curve preceded a recession.

So, what other signs are there? Stay tuned...