Inverted yield curve a signal to buy: CFRA investment strategist

By Elise OggioniMarketsFOXBusiness

The odds don't favor a recession: Raymond James Chief Economist

Raymond James Chief Economist Scott Brown and CFRA Research Investment Strategist Lindsey Bell on the mounting debate over whether there is a U.S. recession on the horizon.

The markets kicked off the trading week with the spread between the 3-month and 10-yr Treasury yields inverted for the second trading day in a row, leaving some investors worried about the possibility of a slowdown ahead.

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But some market strategists say a yield curve inversion may be a signal to buy.

"You will end up seeing the S&P 500 peak about 18 months after the yield curve inverts, so this is actually a signal to buy in the equity markets right now,” CFRA investment strategist Lindsey Bell told FOX Business’ Connell McShane on Monday.

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Bell added that while banks may stop loaning when the yield curve inverts, the overall process takes time and doesn't lead to a recession in the short term.

Raymond James chief economist Scott Brown said he sees a 30 percent chance of a recession in the next 12 months based on how flat the yield curve is sitting at time of publication.

“The yield curve has been probably the single best economic indicator of recession that we have had over the years,” he said on “Cavuto: Coast-to-Coast.”

Brown also added it is typically a year between the time the yield curve inverts and when the economy formally enters a recession.

“The odds don't favor a recession here, but the odds certainly have increased.”

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Former Federal Reserve Chair Janet Yellen told an audience in Hong Kong Monday that she believes the yield curve may signal a need for the Fed to cut interest rates rather than an indicator of a looming recession. Chicago Federal Reserve Bank President Charles Evans also commented that the U.S. economy is showing signs of slowing, but there is no reason to worry about a potential recession.

The 3-month and the 10-year treasury yields inverted for the first time since mid-2007 on Friday.

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