Too often when it comes to economics and finance, previous trends—correlations, to be specific, like that between yield curve inversions and eventually recessions—come to be treated as inviolate natural law. That can lead to significant risk and strategic mistakes.

When there's a yield curve inversion, with interest rates on shorter-term bonds being higher than on longer-term, frequently, although always, there's eventually a recession within a year or so. The explanation is that collectively investors as the "market" perceive that the economy will slow over the longer run, with the Fed lowering short-term rates to prevent a recession. That means when bonds come to maturity, rates will be lower, meaning they won't make as much by reinvesting, so they demand higher interest rates on short-term bonds to make up the difference.

Yield curves have been inverting of late, but Marcus & Millichap recently noted factors that might throw off the interpretation of yield curve inversion. High inflation and responding rapid interest rate increases by the Fed have pushed up short-term Treasury bond rates faster than longer-term ones. Geopolitical churning—the Russian war against Ukraine, escalating dissent and protests in such places as Iran and China—drive investors to seek safer havens for their money, like 10-year US Treasury bonds, driving prices up and yields down. Marcus & Millichap's observation is that these pressures are squeezing rates in opposite directions and creating an unusual type of inversion.