More that a year after the inversion of a major part of the Treasury yield curve, the curve has started to steepen. Many Wall Street pros still believe this could be a true indication of future economic troubles. Inversion of the yield curve occurs when short-term Treasury rates are higher than longer-term ones. The yield curve for the 2-year and 10-year Treasury initially inverted in march 2022. This phenomenon has historically been used to predict recessions. A recession usually takes two years to happen. Many believe that the curve reverting back to its original form is a sign of an imminent downturn. The difference between 2-year and 10-year Treasury rates narrowed to 40 basis points Tuesday, the smallest since May 5. The 10-year benchmark rate has just reached its highest level in seven years. DoubleLine Capital CEO Jeffrey Gundlach is constantly monitoring the bond market to look for any troubling signs. Investors were alerted to the movement of the yield-curve. “I talk about the inversion of the yield curve as a warning sign if you like… but it won’t happen immediately.” Gundlach said to CNBC on September 20 that it takes time. It usually takes 14 to 18 months for the 2s-10s to invert. When the yield curve deinverts it is a clear sign of recession, said the notable bond investor. It was close to occurring. EvercoreISI’s historical research found that the yield-curve turns positive sloped right before a recession starts. Wall Street has been preparing for a recession for most of the last two years. However, the economy has managed to stay afloat largely due to the resilient consumer with plenty of cash and the solid labor market. The Federal Reserve has set a new tone of higher interest rates for longer periods, which is pushing up the yields on long-term bonds. Interest rates have reached their highest level since 2001. The economy could be showing signs of weakness. Unexpectedly, the unemployment rate increased to 3.8% in August. This is a significant increase from July. It’s also the highest level since February 2022. Bill Ackman, Pershing Square’s Bill Ackman, said that he believes aggressive rate increases have caused the economy to slow down. “[T]the Fed is probably finished. Ackman stated Monday that he believes the economy has begun to slow down. “The real interest rate is high enough to slow down the economy. “