The 2 yr and 10 yr bonds have inverted. A recession looming or market confusion over inflation? Either way the VIX rising is showing up as market instability.

One of the more keenly used recession indicators is the 2 yr and 10 yr Treasuries and their inversion.   As noted with the Chart above.   As investors view long term risk on the 10 YR which is in lieu of a recession (Bonds are recessionary safe havens).  This could be seen in late 2019, when COVID-19 was beginning reveal the full blown pandemic, the 2s and 10s inverted indicating that the US will fall into a recession, which it did albeit briefly as the stimulus/central bank trillion dollar underwrite created the reflation trade from hell.  Now with stagflation evident with higher costs on everything,  the market odds that America and the world will dip into a recession has come up on the 2 and 10 yr inversion in July 2022, the 10 yr crossed over closing at 2.18% and the 2 yr rose at 2.82%.

This sent the oil price down and the U.S. Dollar rallied as did stock markets on hope that the Fed may ease off the interest rate trigger.  Which will be unlikely.  Although, what has happened is volatility has now picked up, note the pane beneath the Chart, showing the Volatility Index (VIX) at 18% in Sept 2019, when the 2s and 10s inverted and in July 2022 with evidence of a recession via the same bond indicator, the VIX has risen to 27%.  And that is before stagflation or a recession have been called.