Ark Invest’s Cathie Wood appealed to the Federal Reserve again on Wednesday, saying the central bank is making a policy mistake by raising interest rates sharply as a fall in detections. The innovative investor has pointed to a so-called yield-curve inversion. The yield curve inverts when short-term Treasury yields rise above long-term yields. Many economists view the 2-year 10-year portion of the yield curve as more predictive of a potential recession. “The bond market seems to be signaling that the Fed is making a serious mistake. At -80 basis points (measured by 10-year vs. 2-year Treasury yields), the yield curve is currently in place. more reversed than at any time since the beginning of the year.” of the ’80s when double-digit inflation consolidated,” Wood wrote in a tweet Wednesday morning. The gap between 2-year and 10-year Treasury yields has widened to 80 basis points. curve spiked to 4.33% from just 0.73% at the start of the year as traders priced in a massive Fed rate hike The Fed raised short-term borrowing rates to a target range of 3.75 %-4%, the highest level since January 2008. “Wood said. “In our view, deflation is a much bigger risk than inflation. Commodity prices and massive retail price drops are corroborating this view.” Wood has previously criticized the central bank for making monetary policy decisions based on lagging indicators: employment and core inflation, while several leading indicators are signaling lower inflation. body has reached its peak. The Ark Invest CEO said it was surprising that the energy sector was still trading near record highs even as oil prices have fallen significantly from their peak. US crude was last traded at $74.37, down from a record high of $130 a barrel. “Meanwhile, many pure, early-stage innovation stocks have fallen below their coronavirus lows. The truth will prevail,” Wood said. Wood’s disruptive tech darlings have been among the biggest losers this year as interest rates rise. Her top performing fund Ark Innovation ETF (ARKK) is down 63% year-to-date.