The 3 month T-bill yield is still excessively divergent from the 2 year Treasury yield
If the history of this chart holds true that means that despite whatever bullish fun we are having now, there is a signal in play (3 month T-bill yield grossly exceeds the 2 year Treasury yield) that would trigger a new bear market in stocks within about 1.5 years of the signal’s origin.
We are now about a year in to the current signal as SPX rises to correct its bear market false start last year.
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I have checked the history of 3m-2y on fred. Data goes back to 1981. The difference of 1.12 recorded on May 2023 was largest ever. To get larger timeframe I replaced 3m with FFR (FFR-2y). In 1980/81 it was much higher (5.8 on Jan 1981 vs. 0.93 on May 2023). Perhaps context (inflationary regime) matters. On the other hand, current inflationary regime may be very different to 1980. After all history rhymes, not repeats. Its a fun trying to figure out these relationships.
It’s even more fun marrying them to other indications to see if they form a narrative on probabilities. For example, the T-bill/2yr indication marries well with other signs of a future top and deflationary aftermath. NFTRH 766 has already started laying out that case with this post being one element among several.