What happened last time? › Combinations
What happens when stocks hit a record high with the yield curve inverted?
It has happened 8 times since 1976. A year after it began, the S&P 500 was up 3 of 8 times, with a median move of -7.4%. On an ordinary day in the same years the median was +11.6%, up 78% of the time.
S&P 500: % below its all-time high above -0.01 · 10y minus 2y Treasury below 0. Not true on 2026-09-25.
What came next
| 1 month later | 1 year later | 3 years later | |
|---|---|---|---|
| S&P 500 | -0.3% 50% up · n 8 · normal +1.2% | -7.4% 38% up · n 8 · normal +11.6% | +11.9% 67% up · n 6 · normal +34.0% |
| Gold | -0.5% 38% up · n 8 · normal +0.2% | +10.8% 63% up · n 8 · normal +5.3% | -5.7% 33% up · n 6 · normal +12.5% |
| Oil | -0.3% 38% up · n 8 · normal +0.2% | +16.6% 75% up · n 8 · normal +1.6% | +10.1% 67% up · n 6 · normal +9.2% |
| 10-year yield (pts) | -0.03 pts 38% up · n 8 · normal -0.01 pts | +0.47 pts 75% up · n 8 · normal -0.09 pts | -1.62 pts 17% up · n 6 · normal -0.45 pts |
| Inflation, CPI y/y (pts) | -0.17 pts 25% up · n 8 · normal -0.01 pts | +0.08 pts 50% up · n 8 · normal +0.03 pts | -0.95 pts 17% up · n 6 · normal -0.28 pts |
| Unemployment rate (pts) | 0.00 pts 38% up · n 8 · normal 0.00 pts | +0.30 pts 75% up · n 8 · normal -0.30 pts | +2.10 pts 100% up · n 6 · normal -0.80 pts |
Median move after each episode began, how often it rose, and how many episodes had data. "Normal" is the same move from any trading day in the same years.
Every time it happened
- 2024-05-15 · true for 17 trading days · S&P 500 a year later: +11.5%
- 2024-01-19 · true for 22 trading days · S&P 500 a year later: +23.9%
- 2007-05-30 · true for 4 trading days · S&P 500 a year later: -8.6%
- 2000-03-21 · true for 4 trading days · S&P 500 a year later: -24.9%
- 1998-06-24 · true for 6 trading days · S&P 500 a year later: +16.1%
- 1989-10-03 · true for 5 trading days · S&P 500 a year later: -12.2%
- 1989-08-24 · true for 3 trading days · S&P 500 a year later: -11.4%
- 1980-09-16 · true for 15 trading days · S&P 500 a year later: -6.2%
- 8 separate episodes: a new one starts after 30 days without a match, so one long selloff counts once.
- Few episodes: read the ranges and the interval, not just the median.
- Try enough situations and one will look like an edge by chance.
- Macro numbers are as published at the time. Stocks include companies that later died.
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- What happens when the VIX is above 40 and the Fed has just cut?
- What happens when gold rises while stocks fall?