🔔 When the 3-month U.S. yield screams "CRASH"
Every time the 3-month U.S. Treasury yield curve reached extremes, it was only a matter of time: liquidity decreased, markets faltered — and the crash followed.
It can be seen almost like a textbook in the chart: the 80s, 2000, 2008, COVID, and... the current cycle. The difference is that for 40 years, rates trended downward, but now we are above previous peaks.
This breaks the old model of "fighting every crisis with lower rates" and suggests: the pain could be deeper and longer.
Below — VIX, the fear index. It is a measure of the volatility of the S&P 500, so it reflects the general sentiment of investors. When it rises, there is panic and risk hedging; when it is low, participants are relaxed.
Historically, peaks in yield have almost always preceded increases in the VIX — which means that nerves are still to come. The VIX is calm now, seeming like the "calm before the storm".
