Is the yield spread telling us to be careful for 2018?

2017 is closing. 2018 is believed to be not as good as 2017 for equities investing. We have also just witnessed the third rate hike in US. Equities valuation is commonly believed to be very high. I bet many of us would be very concern about major market adjustment. As we approach the new year, it's always good to take a look at some fundamental factors. The US Treasury yield spread is an important factor that worth our attention. I have downloaded the graph from StLouisFed.org to see if we can spot anything meaningful. The chart above contains 10 yr treasury mature rate (blue line) and 2 yr treasury mature rate (red line) and the spread (10yr minus 2 yr) between them (greed dotted line). Yield spread crossing below zero a few years before recessions Both 10yr (blue) and 2yr (red) yields have been in down trend since height in 1980s 2yr trend line seems a lot less volatile as it approached zero since 2013. 2yr trend line is now slowing crossing up while 10 yr yield tre