Investment trends
Helping you to spot major market moves before they happen.
SEPT. 26, 2026
Are the markets flashing warning signs of a recession?
How the yield on the 10-year Treasury has performed over the last 19 years. Note the recent rise above 5% is the first since 2007.
How the Dow Jones Industrial average performed from 2007 to 2010. The average plunged 53.78% over about 18 months.
IN JULY 2007 the 10-year Treasury yield peaked at 5.29%. Six months later, in December, the Great Recession began, according to the National Bureau of Economic Research.
Over the following 18 months the Dow Jones Industrial Average reflected the recession, plunging 53.78%.
Now—for the first time since then—the 10-year Treasury yield is again above 5%.
Is history about to repeat itself?
After all, the yield has not risen above 5% over the almost 20 years that have passed since that scary time.
An earlier example
- The 10-year yield was above 5% around early 2000.
- The recession began in March 2001.
- Elapsed time: roughly 12–13 months.
You might be temped to believe that now that the 10-year Treasury yield has risen above 5% a recession will follow in the United States in more or less about a year.
Not a rule
This belief of an imminent crash is not based on a fixed historical rule, however.
A 10-year yield above 5% by itself does not reliably predict a recession or determine when one will begin.
After all, the 10-year Treasury yield rose well above 5% in 1994—reaching roughly 8%—during the 1994 bond-market selloff.
No U.S. recession followed; the expansion continued until the recession that began in March 2001.Indeed, the Federal Reserve specifically identifies the 1994 rate-hiking episode as a hiking cycle that did not end in a recession.
There are many other earlier examples of a failure for a recession to follow, because the 10-year yield remained above 5% for long stretches in the 1960s, 1970s, and 1980s without an immediate recession.
Then again...
But then again annual average yields were above 5% in 1967. The next recession began in December 1969—so the initial rise above 5% did not automatically cause a recession within a year, but one did follow not that long after.
The key take-away is that a 5% 10-year yield is not itself a reliable recession signal. The economic context and the yield curve—especially whether short-term rates rise above long-term rates—matter more than the absolute 10-year level.
It might, however, be a good idea now to plan ahead, hedge your bets and play it safe.
Just in case recent history does repeat itself...
— Graham Fysh
Next week
The October turnaround: Will it happen this year?
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The steps are outlined in detail in this book. It is packed with real-life examples and case studies so the reader can see how the businesses applied the 10 steps to make their ventures successful.
These steps can work for you, too, whether your business is only a concept, a start-up or an established company seeking to advance. Indeed, 10 Proven Steps to Small Business Success is essential reading for all small business owners.