As we count down to this month’s meetings of the European Central Bank and the Federal Reserve, both of which are expected to maintain their monetary easing stance, the U.S. yield curve has been quietly undoing the inversion that had raised alarms in the corridors of the world’s two most systemically important central banks. Just as I had argued that the inversion was not a reliable signal of a coming U.S. recession, we should not rush to see this return to more normal conditions as a comforting green light for what’s ahead for the economy. Instead, it is yet another reminder of how traditional market signs have been distorted by years of unconventional central bank policies.

Over the last few weeks, the U.S. yield curve has been slowly and gradually regaining its more traditional upwardly sloping shape whereby longer maturity bonds trade at a higher level than their shorter-maturity peers. On the most-watched segment of the cure, the so-called 2’s-10’s, the benchmark 10-year Treasury traded at 1.75% at the market close on Friday, or 17 basis points above the yield on the two-year note. The curve for the 10-year bond and the three-month Treasury bill has also reverted to normal, though several of the intervening segments remain inverted for now.