DoubleLine Capital CEO Jeffrey Gundlach urged investors to heed worsening recession signals from the bond market. In a tweet Tuesday night, Gundlach pointed to an inversion of the yield curve that he called a “reliable signal of economic trouble,” saying investors should “manage risk for the future.” Fit.” The yield curve inverts when short-term Treasury yields rise above long-term yields. Many economists consider the 2-year 10-year portion of the yield curve to be more predictive of a potential recession. The 2-year to 10-year curve first inverted on March 31, then reverted to a positive value before inverting briefly in June. That part of the curve has been inverted since the beginning of the month. Seven. Recession fears increased recently after Federal Reserve Chairman Jerome Powell last Friday vowed to continue raising interest rates to curb inflation in a way that would cause “some pain.” for the US economy. Even with a series of four consecutive rate hikes totaling 2.25 percentage points, Powell said this is “nowhere to stop or pause.” Gundlach has been monitoring the yield curve for signs of a recession for some time. In the past, he has urged investors to take the index seriously as it has proven its accuracy over the decades. He said the inversion of the relationship between two-year and 10-year bonds has signaled recession four of the past four times. While yield curve inversion is a reliable recession predictor, it usually takes nearly two years for a recession to occur.